Defining Full Retirement Age
Full Retirement Age (FRA) is the age at which you become eligible for your full, unreduced Social Security retirement benefits. Claiming benefits before your FRA results in a permanent reduction. For those born in 1960 or later, the FRA is 67, an increase mandated by Congress in 1983 to reflect longer life expectancies. Note that FRA is distinct from Medicare eligibility, which typically begins at age 65.
Your Social Security Benefits Are No Longer Reduced
Reaching your FRA means you can receive your full monthly Social Security benefit. If you claimed benefits before your FRA, those payments were permanently reduced. At FRA, that reduction becomes permanent, and your current benefit amount is the new baseline, subject to cost-of-living adjustments.
The Earnings Test Disappears
Before your FRA, the Social Security Administration (SSA) has an earnings test. If your earnings exceed a certain limit ($62,160 in 2025 for months before FRA), your benefits are temporarily reduced. Once you reach your FRA month, this test is removed, and you can earn any amount without your Social Security benefits being reduced. Benefits withheld before FRA due to the earnings test are not lost; the SSA recalculates your payments at FRA to account for this, resulting in a higher monthly amount.
Delayed Retirement Credits for Waiting Longer
You can increase your monthly Social Security benefit even further by delaying claiming past your FRA, up to age 70. These Delayed Retirement Credits (DRCs) add a percentage to your benefit for each month you delay. For those born in 1943 or later, this increase is 8% per year. DRCs stop accumulating at age 70. Delaying can be beneficial if you have other income sources and are in good health.
What to Know About Medicare and Full Retirement Age
Medicare eligibility typically starts at 65, independent of your FRA.
- Signing up for Medicare at 65: It is strongly advised to enroll in Medicare when you first become eligible at 65, even if you delay Social Security benefits. Late enrollment can result in permanent penalties.
- Automatic enrollment: If you receive Social Security benefits at age 65, you are usually automatically enrolled in Medicare Parts A and B.
- Delaying Medicare Part B: If you have group health coverage through work, you might be able to delay Part B without penalty. However, coordination is necessary to avoid gaps.
Comparing Claiming Ages
Understanding how different claiming ages impact your benefits is crucial. The table below outlines key differences:
| Feature | Claiming Early (Age 62) | Claiming at FRA (Age 67) | Claiming Late (Age 70) |
|---|---|---|---|
| Monthly Benefit | Permanently reduced for life (up to 30% for those with FRA of 67). | 100% of your Primary Insurance Amount (PIA). | 100% of your PIA + Delayed Retirement Credits (DRCs), which increase the benefit by 8% per year. |
| Earnings Test | Subject to annual earnings limit. Benefits are reduced if you earn over the limit. | No earnings limit. You can earn any amount and receive your full benefit. | No earnings limit. Maximum possible monthly benefit. |
| Lifetime Benefits | Receiving payments for a longer period of time, but at a reduced monthly rate. Actuarially similar to other options if you live to average life expectancy. | Receiving payments at your full rate. | Receiving payments for a shorter period, but at a significantly higher monthly rate. A hedge against outliving other assets. |
| Medicare | Eligibility still begins at 65. It is separate from when you claim Social Security. | Eligibility still begins at 65. | Eligibility still begins at 65. |
The Tax Implications of Your Benefits
Social Security benefits can be subject to federal income tax based on your combined income. Combined income includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. Exceeding certain thresholds ($25,000 for single filers, $32,000 for married filing jointly) can result in up to 50% of your benefits being taxable. Higher incomes can lead to up to 85% of benefits being taxed. Working at or past FRA can increase your combined income and potentially the taxable portion of your benefits. The Social Security Administration's website is an authoritative source for details on how work affects benefits and tax implications.
Final Thoughts on Your Retirement Decisions
Reaching your full retirement age is a significant step, allowing you to claim your unreduced Social Security benefits. It's a time to evaluate your financial and personal goals, considering whether to claim now or delay for larger future payments. This choice is individual and should be guided by your health, financial needs, and life expectancy. Understanding the details of benefits, earnings, Medicare, and taxes is crucial for making the best decision for a secure retirement.
