Full retirement age is the age you need to reach in order to receive 100 percent of the monthly benefit you are entitled to.
Your full retirement age is based on the year in which you were born.
If you choose to take benefits before you reach the full retirement age, your monthly benefit will be permanently reduced. If you choose to begin to take benefits after you reach the full retirement age, your monthly payment will increase monthly until you reach age 70.
Whether retirement is far down the road or only a couple of years away, it’s exciting to think that there will come a day when you no longer need to work for an income. Maybe you’ve set a date (or if you’re still farther out, targeted an age) for when you will retire, but the nice thing is that you typically get to choose the time and age that is right for you.
Depending on how your financial situation shakes out, you may choose to retire earlier than you previously intended or delay retirement for years. Whatever retirement date you choose, there are some things to know about to when you can start collecting certain retirement benefits—such as Social Security.
Social Security is one of the sources of income most people think about when they begin to plan how they will pay for their retirement years, yet there are some rules related to when you can begin taking this benefit. While you can start collecting Social Security as soon as you turn 62, doing so reduces your monthly payments for life. On the flipside, you can wait until you’re age 70, which can increase the amount you get each month—again for the rest of your life.
Here, we’ll break down what you need to know about how the timing of when you claim Social Security will affect your benefits for the rest of your life.
What is full retirement age?
Full retirement age is the age you need to reach to receive 100 percent of the monthly benefit you are entitled to. (Your benefit amount is determined by how much you’ve made throughout your career.) However, you can choose to begin taking benefits before or after the full retirement age, which will impact the total benefit amount you’re eligible to receive.
Why is full retirement age important?
There is a direct relationship between your full retirement age and your benefit amount. In order to receive your full benefit amount, you need to wait until you reach full retirement age to begin taking benefits. However, you are eligible to begin taking benefits before (at age 62) or after (up to age 70) your full retirement age.
If you take benefits before your full retirement age
If you decide to file for Social Security before your full retirement age, your monthly benefits will be reduced, which also reduces the total amount you will receive. (How much your benefit amount is reduced depends on how old you are at the time you begin taking Social Security.) In 2023, if you were born in 1960 or later, your monthly payments are reduced by 30 percent if you retire at the age of 62, meaning that on a monthly basis you’ll only collect 70 percent of your full benefit. If you choose to claim benefits early and continue to work, your benefits may be reduced even further if you make over $21,240 (the yearly earning limit).
If you begin to take benefits after your full retirement age
If you delay your retirement past the full retirement age, your benefit payment will increase by a percentage for each month that you delay taking your benefit, up to 8 percent per year. You can continue to accrue benefit increases each month until you turn 70, at which point you’ll no longer be eligible for any additional increases even if you continue to delay taking benefit payments.
Say, for example, you were born in 1960 and retire at age 67. At that time, you’ll be eligible to receive your full benefit payment—let’s say, $1,000 per month. If instead you chose to retire at age 62, your monthly benefit would amount to only $700 per month instead of the full $1,000.
However, if you wait until you are 72 to begin taking benefits, your monthly payout at that time (before adjusting for any inflation) will have grown to around $1,360 per month instead of $1,000. By delaying when you receive this benefit, you will have increased your monthly payment amount by around 36 percent.
How do you know your full retirement age?
Your full retirement age is based on your year of birth. Because today people are generally living longer and staying healthier later into their lives, Congress passed a law in 1983 to raise the full retirement age. So now, depending on when you were born, your retirement age may vary slightly.
If you were born in 1960 or later, your full retirement age is 67. But if you were born before 1960, your retirement age may be slightly lower:
Because beginning or delaying retirement by even a few months can have an impact on your monthly payment for the rest of your life, many people choose to explore different scenarios when planning for retirement. But running scenarios can quickly get complicated because there’s a lot to consider. Thankfully, there are resources to help simplify this process.
For example, the Social Security Administration has a retirement age calculator that applies the Social Security age chart to each age class, listing—down to the month—how much your retirement benefit will be reduced should you choose to begin taking it early.
When should you start taking Social Security?
The first step in understanding where Social Security will fit into your retirement plan is to identify your full retirement age. From there, you can use the full retirement age chart to calculate how your benefits would change if you begin taking benefits early or if you delay claiming. Other than your desire to stop working full time, you’ll want to take into account other important factors, like your general health and life expectancy when weighing this decision. You’ll also want to consider other sources of income you’ve planned for in retirement, such as retirement accounts, annuities and other financial tools.
Because there are so many variables to consider, a financial advisor can be a helpful resource to use when developing your retirement strategy. And if you’re further out from retirement, there’s still a lot that could change by the time you retire. Even if you’ve got a plan in place, regularly consulting with your financial advisor can help make sure your plan stays aligned with what life throws your way.
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