The History Behind the Change in Full Retirement Age
For many years, the standard full retirement age for Social Security was 65. However, in 1983, Congress passed amendments to the Social Security Act to address concerns about the program's long-term financial solvency, primarily due to increased life expectancies. The legislation set a gradual schedule to increase the full retirement age (FRA), ensuring the program's sustainability for future generations. This phased-in approach meant that individuals born in different years would have different FRAs, moving in two-month increments until the age of 67 was reached.
The Path to Age 67
The gradual increase in the full retirement age was designed to provide workers with ample notice to adjust their retirement savings and planning. The shift began with those born in 1938 and later, with the age increasing by a few months for each subsequent birth year. This process culminated for those born in 1960 or later, whose full retirement age was set at 67. This means the transition period is now complete for younger generations entering the workforce.
Understanding Your Full Retirement Age by Birth Year
To determine your precise full retirement age, you must look at your year of birth. While 67 is the FRA for everyone born after 1960, those born in the preceding years have a slightly different age. This distinction is vital for accurate retirement planning and for maximizing your Social Security benefits. Here is a simplified table showing how the FRA has shifted over time:
| Year of Birth | Full Retirement Age |
|---|---|
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
The Financial Implications of Your Claiming Age
Your full retirement age is not the only age at which you can claim benefits. The Social Security Administration allows you to start collecting as early as age 62 or delay your benefits until age 70. However, the age you choose has a significant and permanent effect on your monthly payment amount.
Claiming Early vs. Delaying Benefits
- Claiming Early (Age 62): If you choose to take your benefits at the earliest possible age, they will be permanently reduced. For someone with an FRA of 67, claiming at 62 results in a monthly benefit that is 30% lower. This can be a substantial difference over the course of your retirement.
- Delaying Until Age 70: If you wait past your FRA, you can earn delayed retirement credits. For each year you postpone claiming beyond your FRA (up to age 70), your monthly benefit amount increases by about 8%. This can result in a significantly larger monthly check and can act as a form of insurance against the financial risks of a long life.
- Weighing the Options: The right claiming age depends on various factors, including your health, financial needs, and life expectancy. For example, if you are in good health and can afford to wait, delaying can provide a larger, more secure income stream. Conversely, if you have health issues or need the income immediately, claiming earlier might be the best option.
Working While Receiving Social Security
If you work while collecting Social Security benefits before reaching your FRA, your benefits may be temporarily reduced if your earnings exceed a certain limit. Once you reach your full retirement age, the earnings test disappears, and you can earn as much as you want without affecting your benefits.
How to Plan for the Change and What Might Come Next
Navigating the nuances of Social Security requires a proactive approach. Here are some steps you can take to prepare for your retirement, particularly with these age changes in mind:
- Check Your Earnings Record: Regularly review your Social Security earnings record for accuracy. You can create a free 'my Social Security' account on the official SSA website to view your statement and get personalized benefit estimates. Visit the Social Security Administration website here.
- Estimate Your Benefits: Use the retirement calculators available on the SSA website to see how different claiming ages would affect your monthly benefit amount. This can help you make a more informed decision.
- Explore All Your Options: Look beyond Social Security. Your retirement plan should include a mix of income sources, including personal savings, investments, and pensions. This diversification can help insulate you from changes to the Social Security program.
- Stay Informed About Potential Reforms: While the increase to age 67 is complete, future changes are always a possibility. Lawmakers sometimes discuss raising the full retirement age further to shore up the program's finances. Staying aware of these ongoing discussions can help you make proactive adjustments to your plan.
Conclusion
The answer to the question, "Is the retirement age going up to 67?" is that it already has for everyone born in 1960 or later. This change, stemming from the 1983 Social Security Amendments, was a response to shifting demographics and is a crucial factor in retirement planning. By understanding your specific full retirement age and the financial trade-offs of claiming benefits early versus delaying, you can make the most informed decision for your unique circumstances. Planning is key to ensuring a financially secure and comfortable retirement. The more you know, the better prepared you'll be to navigate your path to retirement with confidence.
