The Social Security Full Retirement Age (FRA)

Your Full Retirement Age (FRA) is the age at which you are eligible to receive your full Social Security benefits, based on your birth year. For those born between 1943 and 1954, your FRA is 66 years old. For people born after 1954, the FRA gradually increases to 67 for those born in 1960 or later.

• Early Claiming: You can begin receiving benefits as early as age 62, but your monthly benefit will be reduced to reflect the fact that you are claiming before your FRA.
• Delayed Claiming: If you delay your claim beyond your FRA, your benefits will increase by 8% per year up to age 70. This is the highest possible monthly benefit.

Claiming Early vs. Delaying: Pros and Cons

Understanding the trade-offs between claiming early and delaying your claim is essential to maximize your Social Security benefits.

Claiming Early (Age 62)

Pros:

• Immediate Access to Benefits: If you need income immediately or have health concerns, claiming early provides financial support sooner.
• Access to Funds: If you plan to work part-time or want to take Social Security benefits to supplement other retirement income, early claiming might be ideal.

Cons:

• Reduced Monthly Payments: Claiming benefits at 62 results in a permanent reduction of your monthly payments, as you will receive a smaller percentage of the full benefit.
• Reduced Lifetime Benefits: Although you begin collecting sooner, your monthly benefit will be lower for the rest of your life, which may add up to less over time.

Claiming at Full Retirement Age (FRA)

Pros:

• Maximized Monthly Benefit: If you claim at your FRA, you’ll receive the full benefit you’re entitled to without any reductions.
• More Flexibility: You can choose to claim at FRA if you don’t need immediate income but want a larger monthly payment than what you would receive if you claimed earlier.

Cons:

• No Boost from Delaying: If you claim at your FRA, you won’t receive the additional 8% per year benefit increase for delaying your claim.

Delaying to Age 70

Pros:

• Maximum Monthly Benefit: Delaying your Social Security benefits until age 70 provides the maximum possible benefit. Your monthly payments will increase by 8% annually for each year you delay beyond your FRA, resulting in significantly higher lifetime benefits.
• Longevity Benefits: If you expect to live longer than average, delaying may maximize your lifetime Social Security benefits.

Cons:

• No Benefits Until Age 70: If you need income before age 70, delaying benefits may not be the best option. This means you will not receive any Social Security benefits until you start at age 70.

Factors to Consider When Deciding When to Claim

Several personal factors should be considered when deciding the right age to start your Social Security benefits:

Your Health and Life Expectancy

If you are in good health and have a family history of longevity, delaying Social Security to age 70 might make sense to maximize your lifetime benefits. On the other hand, if your health is a concern or you have a shorter life expectancy, claiming benefits earlier may be beneficial.

Your Financial Situation

If you need immediate income to cover living expenses, it may be better to start claiming Social Security benefits earlier. However, if you have other sources of retirement income (like pension or savings), you may have the flexibility to delay and increase your monthly benefit.

Your Employment Plans

If you plan to continue working after 62, claiming Social Security benefits early might be less advantageous, as earning above a certain limit could result in reduced benefits. The SSA withholds a portion of your Social Security payments if you earn over the annual limit before reaching your FRA.

Spousal Benefits

If you are married, your decision about when to claim may also be influenced by spousal benefits. You and your spouse can strategize about when to take benefits to maximize the household's overall Social Security income.

How Delayed Retirement Credits Work

If you decide to delay claiming your Social Security benefits, your monthly payment will increase each year by 8% per year between your FRA and age 70. This is known as delayed retirement credits.

For example, if your Full Retirement Age benefit is $2,000 per month, delaying until age 70 would increase your benefit to $2,640 per month (an increase of 32% over 4 years of delayed claiming).

• Important Note: Once you reach age 70, there is no further benefit to delaying, as you will have already reached the maximum benefit amount.