Understanding the Full Retirement Age for 1966
The Social Security Administration sets the Full Retirement Age (FRA) based on your birth year. This age determines when you can begin receiving your primary insurance amount (PIA)—your full, unreduced Social Security benefit. For many years, the FRA was 65, but legislative changes in 1983 gradually increased it due to Americans living longer. For those born in 1966, the FRA is 67.
The phased-in increase means that individuals born between 1943 and 1959 have an FRA somewhere between 66 and 67, depending on their specific birth year. However, for anyone born in 1960 or later, the FRA is set at 67. This means that to receive your maximum monthly benefit, a person born in 1966 must wait until they are 67 to claim their benefits.
The Impact of Claiming Benefits Early
While your full retirement age is 67, you have the option to start receiving Social Security benefits as early as age 62. However, this decision comes with a permanent reduction in your monthly benefit amount. The reduction is calculated based on how far in advance of your FRA you begin collecting benefits. For those born in 1966, who would be claiming benefits five years early at age 62, the permanent reduction is significant.
For example, a person born in 1966 who claims benefits at age 62 would only receive 70% of their full retirement benefit. This is a substantial and permanent decrease that can significantly impact your retirement income over the long term. This is a critical factor to consider when planning your retirement and weighing the pros and cons of claiming benefits early versus waiting until your FRA.
Benefits of Delaying Retirement
Conversely, you can choose to delay claiming your Social Security benefits past your full retirement age of 67. This decision can increase your monthly benefit amount through Delayed Retirement Credits (DRCs). These credits increase your benefit by a certain percentage for each month you delay, up until age 70. The annual increase is currently 8% for those with an FRA of 67.
For a person born in 1966, delaying until age 70 would mean a substantial increase in their monthly benefit. The higher monthly payment would be a permanent increase that would also form the basis for future cost-of-living adjustments (COLAs). This strategy is often appealing to individuals who can afford to wait and want to maximize their retirement income.
Comparison of Claiming Ages for someone born in 1966
| Claiming Age | Benefit Amount at Claiming | Benefits Test Threshold | Notes |
|---|---|---|---|
| Age 62 | 70% of Full Benefit | Annual earnings limit applies | Permanent reduction in monthly payments. |
| Age 67 (FRA) | 100% of Full Benefit | No earnings limit applies | Receive your full, unreduced benefit amount. |
| Age 70 (Maximum) | 124% of Full Benefit (approx) | No earnings limit applies | Maximum possible monthly benefit due to DRCs. |
Factors to Consider When Deciding When to Claim
Deciding when to claim Social Security benefits is a personal choice influenced by many factors. Here are some key considerations for someone born in 1966:
- Health and Longevity: Your personal health and family history of longevity can be a significant factor. If you expect to live a long life, delaying benefits can provide a larger income stream for a longer period. If your health is poor, claiming earlier might be the best option.
- Financial Needs: Your current financial situation, other sources of retirement income, and whether you are still working can all impact your decision. If you need the income immediately, claiming early is an option, though with a reduced benefit.
- Spousal Benefits: If you are married, your claiming decision can affect your spouse's benefits, especially if they have lower earnings. It is important to coordinate your claiming strategy with your spouse to maximize your combined household retirement income.
- Earnings Test: If you claim benefits before your FRA and continue to work, your benefits may be temporarily reduced if you earn over a certain annual limit. At your FRA, this earnings test no longer applies.
For those seeking more personalized guidance on their specific retirement plan, consulting with a financial advisor can be a wise choice. It is important to fully understand the financial implications of your decision before you begin collecting Social Security. For official information, the Social Security Administration's website is the authoritative source and offers a wealth of tools and resources for planning, including benefit calculators.
Conclusion
For someone born in 1966, the full retirement age is 67. However, this is just the baseline for receiving your unreduced benefit. Your claiming age is a flexible and important decision that should be carefully considered based on your personal health, financial needs, and desired lifestyle in retirement. By understanding the options for claiming early, at your FRA, or delaying until age 70, you can make an informed choice that best suits your individual circumstances.
Learn more about your Social Security options directly from the source at the Social Security Administration's official website: www.ssa.gov
