The Shift from Age 65 to 67
For decades, the standard Social Security full retirement age (FRA) was 65, a benchmark many still remember and associate with retirement. However, the rules changed in 1983 when Congress passed legislation to gradually increase the FRA, primarily in response to rising life expectancies and to ensure the long-term solvency of the Social Security program.
The gradual adjustment began with people born in 1938 and later, increasing the FRA in two-month increments for each birth year. The process culminated with anyone born in 1960 or later, for whom the FRA is now a static 67. This change means that the concept of 'retiring at 65' is now outdated for a significant portion of the population, especially for younger generations. While Medicare eligibility still begins at 65, the age for receiving full Social Security benefits is distinct and depends entirely on your birth year.
Impact on Early and Delayed Claiming
Understanding your FRA is critical because it directly influences the size of your monthly benefit payments. You can start receiving Social Security benefits as early as age 62, but doing so will result in a permanently reduced monthly payment. Conversely, if you delay claiming benefits past your FRA, you can earn delayed retirement credits that increase your monthly payment up until age 70.
For someone with an FRA of 67, claiming benefits at age 62 could result in a permanent reduction of up to 30%. On the other hand, delaying benefits to age 70 would provide a monthly payment that is 24% higher than the full benefit. This difference can have a profound effect on your financial security throughout retirement.
A Tale of Two Retirements: 65 vs. 67
While the FRA for many is now 67, the age of 65 remains a significant marker for other benefits, most notably Medicare. This creates a situation where individuals may have to bridge the gap between their Medicare eligibility and their full retirement benefits. Planning for this two-part retirement can be complex, and requires careful consideration of how to fund the years between 65 and your FRA.
-
Scenario 1: Retiring at 65 (with an FRA of 67): If you were born in 1960 or later and choose to retire at 65, you will still be eligible for Medicare. However, your Social Security benefits will be permanently reduced because you are claiming them before your FRA. You would need to rely on personal savings or other income sources to cover living expenses until your Social Security benefits begin, and you must accept the lower monthly payments for the rest of your life. This option is popular for those who are ready to stop working early but have adequate savings to supplement their income.
-
Scenario 2: Retiring at 67 (or Later): For those born in 1960 or later, retiring at age 67 allows you to receive 100% of the Social Security benefits you have earned. If you are able to continue working, your later years of higher earnings will likely increase your overall benefit amount. Delaying even longer, up to age 70, provides a guaranteed increase to your monthly payments, a strategic move for maximizing lifetime benefits.
Comparison Table: Retirement Age and Benefits
| Birth Year | Full Retirement Age (FRA) | Earliest Eligibility Age | Max Benefits Age | Benefit Reduction at Age 62 | Benefit Increase at Age 70 (vs FRA) |
|---|---|---|---|---|---|
| 1943–1954 | 66 | 62 | 70 | ~25.0% | +32% |
| 1955 | 66 and 2 months | 62 | 70 | ~25.8% | +30.9% |
| 1956 | 66 and 4 months | 62 | 70 | ~26.7% | +29.8% |
| 1957 | 66 and 6 months | 62 | 70 | ~27.5% | +28.6% |
| 1958 | 66 and 8 months | 62 | 70 | ~28.3% | +27.5% |
| 1959 | 66 and 10 months | 62 | 70 | ~29.2% | +26.3% |
| 1960 and later | 67 | 62 | 70 | ~30.0% | +24% |
The Bigger Picture: Retirement Trends
The shift in the full retirement age is part of a broader trend of Americans working longer, influenced by factors beyond just Social Security changes. The move from defined-benefit pensions to defined-contribution plans like 401(k)s places more responsibility on the individual for retirement savings. Longer lifespans also necessitate a longer period of financial support, making delayed claiming a more attractive option for many.
While delaying Social Security benefits offers a significant monthly payment increase, it's not a universal solution. Lower earners or those in physically demanding jobs may not have the luxury of waiting. Experts continue to debate further increases to the retirement age, with some proposals suggesting a gradual raise to 69. This ongoing discussion underscores the need for individuals to stay informed and plan proactively for their retirement.
Conclusion
For most people in the modern workforce, the question of "is retirement age 65 or 67?" is definitively answered: the full retirement age for Social Security is 67. The age of 65 is no longer the benchmark for full benefits, though it remains a key milestone for Medicare eligibility. The decision of when to retire—early at 62 with reduced benefits, at your full retirement age of 67, or delayed up to 70 for maximum benefits—is a personal one with long-term financial consequences. Proactive financial planning, understanding your specific birth-year FRA, and considering other factors like health and savings are essential for navigating this new retirement landscape. By being informed, you can make the best decision to ensure financial stability in your golden years.
- For detailed information on Social Security benefits by birth year, visit the official Social Security Administration website: Benefits by Year of Birth.
