While 65 is a traditional retirement age and aligns with Medicare eligibility, it is no longer the full retirement age (FRA) for individuals born in 1960 or later. Claiming Social Security benefits at 65 when your FRA is 67 has several significant disadvantages.
The primary downside: Reduced monthly benefits
Claiming Social Security at 65 means your monthly benefit will be permanently reduced compared to waiting until your FRA. The Social Security Administration reduces your benefits for each month you claim before your FRA. For those with an FRA of 67, claiming at 65 (24 months early) results in a permanent reduction of about 13.34% of your monthly benefit. This reduction lasts for the duration of your retirement.
Missing out on delayed retirement credits
By claiming at 65, you also miss the opportunity to earn delayed retirement credits (DRCs). DRCs increase your monthly benefit by 8% for each year you delay claiming past your FRA, up to age 70. Delaying until age 70 for someone with an FRA of 67 can lead to a 24% higher monthly benefit for life.
Impact on spousal and survivor benefits
Your claiming age also affects potential spousal and survivor benefits for your spouse. If you are the higher earner, claiming at 65 can permanently reduce the survivor benefit your spouse receives after your death, as it is based on your reduced benefit amount. This can have a long-term financial impact on your surviving spouse.
The break-even calculation
Claiming at 65 provides income sooner, but delaying benefits can result in higher total lifetime benefits if you live past your break-even age. This is the age when the cumulative higher payments from delaying catch up to the total received from earlier, smaller payments. The break-even age is typically in the late 70s or early 80s. If you expect to live longer, delaying benefits may provide more total income over your lifetime.
Comparison table: Claiming at 65 vs. delaying
| Feature | Claiming at 65 (FRA 67) | Waiting until FRA (67) | Waiting until 70 |
|---|---|---|---|
| Monthly Benefit | Permanently reduced (~13.34% lower) | 100% of your primary insurance amount | Permanently increased (24% higher than FRA) |
| Delayed Retirement Credits | None earned | None earned | Earned from FRA to age 70 (8% per year) |
| Income Access | Immediate income boost | Two-year delay for full benefit | Three-year delay for maximum benefit |
| Lifetime Income (avg.) | Lower total lifetime benefits if you live past the break-even age | Higher total lifetime benefits than claiming at 65 if you live long enough | Highest potential total lifetime benefits if you live past the break-even age |
| Survivor Benefits | Permanently reduced for surviving spouse | Maximize your spouse's survivor benefit at 100% of your FRA amount | Increase your spouse's survivor benefit by your DRCs |
Conclusion: Making an informed decision
Taking Social Security at age 65 when your Full Retirement Age is 67 results in a permanent reduction in your monthly benefits and the loss of delayed retirement credits, impacting both your income and potentially your spouse's survivor benefits. While immediate income may be needed, considering health, life expectancy, and other resources is crucial. Delaying benefits beyond 65 can lead to a significantly higher, inflation-protected income stream for a more financially secure retirement.
- Learn more about when and how to claim from the Social Security Administration.
