Your Full Retirement Age Explained
Your full retirement age (FRA) is the age you can receive 100% of your Social Security retirement benefits, based on your earnings [1, 3]. For those born in 1960 or later, the FRA is 67 [1, 2]. Claiming benefits before or after this age permanently alters your monthly benefit amount [1].
The Impact of Claiming Benefits Early
Claiming Social Security before your FRA permanently reduces your monthly benefit [1]. The reduction is calculated based on how many months you claim early [1]. For individuals claiming 24 months early at age 65, the reduction is approximately 13.3% [1]. This means your monthly benefit will be about 13.3% lower for life compared to waiting until age 67 [1].
A Side-by-Side Comparison: Retiring at 65 vs. 67
Consider a hypothetical individual with an FRA of 67 and a primary insurance amount (PIA) of $2,000 at age 67 (the amount received at FRA). Retiring at 65 would result in a reduced monthly benefit of roughly $1,734 (a 13.3% reduction) [1]. Waiting until 67 means receiving the full $2,000 monthly benefit. While claiming early provides income sooner, waiting generally results in higher total lifetime benefits, particularly for those with longer life expectancies [2].
| Retiring at 65 | Retiring at 67 | |
|---|---|---|
| Monthly Benefit | $1,734 | $2,000 |
| Benefit Reduction | 13.3% | 0% |
- Note: This is a simplified example and does not include potential cost-of-living adjustments. [1, 2]
Evaluating the Broader Financial Picture
Your decision on when to claim Social Security affects other aspects of your retirement:
- Spousal and Survivor Benefits: Claiming early reduces your benefit, which can lower the survivor benefits available to your spouse [2].
- Medicare and Healthcare Costs: Medicare eligibility begins at 65, regardless of when you claim Social Security [2]. However, coordinating healthcare costs and premiums if you retire at 65 but delay Social Security needs careful planning [2].
- Bridging the Income Gap: Retiring at 65 requires having funds to cover expenses for two years until claiming Social Security [2].
- Earning Limits: If you work before your FRA while collecting benefits, your benefits may be temporarily reduced if your earnings exceed a certain limit [3]. This reduction is not permanent and is credited back later [3].
The Break-Even Point: When Waiting Pays Off
The break-even point is when the total cumulative benefits from delaying claiming surpass the total benefits from claiming early [2]. For someone with an average life expectancy, waiting until 67 often leads to a higher total payout over their lifetime [2]. Your health and expected longevity are key factors in determining the best claiming age for you [2]. You can get a personalized estimate of your benefits on the official Social Security Administration website. [3]
Considerations for Healthy Aging and Senior Care
Deciding when to retire also involves considering your well-being. Continuing to work can offer cognitive and social benefits [2]. Conversely, health issues or job demands might make early retirement necessary for your health [2]. Factors to consider include your physical and mental health, and potential caregiving roles [2].
Conclusion
Retiring at 65 means a permanent 13.3% reduction in your Social Security benefits compared to waiting until 67 [1]. This decision has long-term financial implications for you and potentially your spouse [2]. Carefully evaluating your financial situation, health, and retirement goals is crucial to making the best choice for a secure and healthy retirement [2].
