When speaking about the average retirement age for most, the most commonly accepted age people have settled on is usually around 65. For many years, this has been the norm and this includes eligibility for Social Security upon retirement. However, as of 1983, a law changing this was signed into effect. The passing of this new law meant that now, the retirement age would be gradually increased. This increase was brought into effect in order to account for the growing life expectancy of Americans.
As such, a new full retirement age has come into effect as of 2025 and it will mainly impact those born in 1959. It is crucial for beneficiaries to be fully aware of their actual full retirement age as claiming Social Security benefits too early could likely result in one’s benefit amount being reduced.
What is the Full Retirement Age in relation to Social Security?
The Full Retirement Age, or FRA, is the age at which a retiree may begin claiming their full monthly Social Security benefits. This monthly figure is determined based on the beneficiary’s earnings during the years that they had been employed.
This year, the FRA for individuals born in the year 1959 has been increased to 66 years and ten months of age. Additionally, those born in 1958 will reach their FRA at 66 years and eight months of age, and those born during or after 1960, will reach their FRA at the age of 67.
These are the ages at which a beneficiary will be able to claim their full benefits, however, retirees can begin receiving benefits from as early as 62 years of age. The caveat to this, however, is that their monthly benefit will be reduced. In order to avoid a reduced monthly benefit, experts recommend waiting till 70 years of age before starting to claim benefits to ensure you are reaping the maximum possible benefit amounts.
How big is the reduction for early claimants?
As stated above, the earlier an individual begins claiming Social Security benefits, the higher the reduction to their monthly amounts will be. According to the SSA, a beneficiary’s monthly benefit can be reduced by up to 30%, depending on how early they had began claiming benefits prior to reaching their FRA.
On the other hand, if a beneficiary delays claiming benefits beyond the age of their FRA, they will receive a yearly increase of 8% to their benefits until they reach the age of 70. Due to this gradual increase, a beneficiary could see a 32% increase to their monthly benefits by the time they reach the age of 70.
As such, if possible, older adults should consider holding out on claiming until they have passed their FRA.
How to maximize retirement income
According to Stephanie McCullough, founder and financial planner at Sofia Financial, our best guesses have to go into these calculations since we are short of one rather important variable: the age at which we will die.
“One of the most helpful things all of us can do, which serves us well in a multitude of situations, is to try to keep our fixed expenses as low as we can. Those hard-to-change, repeated regular costs like housing, car payments, utilities, and monthly bills,” McCullough advises. “I’m not saying you shouldn’t enjoy your life–quite the opposite! If you keep those fixed costs low, you have more room for discretionary fun stuff, as well as to adjust to any exogenous shocks life throws at you.”
Additionally, with regards to when the best time to claim is, McCullough says, “Waiting until 70 certainly has its benefits: a higher initial monthly payment, which means greater cost-of-living (inflation) adjustments (since they are a percent), and one that people may overlook is higher survivor benefits for the surviving spouse, if applicable. Even if the higher-earner in a couple may not live terribly long, their benefit amount will determine how much the widow(er) receives for the remainder of their life, which can have a big impact over the years.”