Social Security is nearing a century of existence and for the last 89 years, the insurance program has been functioning as a source of income for a variety of people, such as retirees, disabled individuals, and survivors. The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935 as a means of fighting elder poverty by providing a stable income to those aged 65 and beyond. Kenneth S. Davis, a biographer, described the Social Security Act as “the most important single piece of social legislation in the entirely of American history.”
In the case of retirees, there are some caveats to claiming benefits in relation to your age. Here is what you need to know.
Social Security Full Retirement Age
On average, most workers retire at age 65, however, Social Security benefits can be claimed starting at age 62, but claiming from this age will result in a reduced benefit amount as it is several years prior to the Full Retirement Age. The notion of a Full Retirement Age came about during the 80s after the program was faced with severe financial stress pressures as a result of consecutive recessions.
Subsequently, in 1983, amendments were made to the program since payments had begun to exceed income, meaning that the entire program would soon collapse if no change was implemented. Additionally, around 1983, the life expectancy of the average person had also increased to at least 74 years of age. When the program was first introduced, however, the life expectancy stood at around 61 years of age. Today, life expectancy is 79 years of age.
In order to aid the matter of higher life expectancy, the program was amended and as a result, the Full Retirement Age would be gradually increased in increments of two months. The president at the time, Ronald Reagan, signed into law a set of reforms that had been passed by Congress around 40 or so years ago. As a result, individuals turning 65 in 1990 were the final cohort to have a Full Retirement Age of 65 because the two month increases began as of 1991.
The incremental increases are set to reach an end as of 2026. At this point, the full retirement age will hold steady at age 67 — applicable to those born in 1960 and later. Following this, the Full Retirement Age will no longer be increased, marking an end to this transitional period, unless Congress intervenes with a new amendment or reforms. In 2025, the Full Retirement Age for those born in 1959 was increased to 66 years and 10 months.
What is the optimal age to begin claiming?
Even though benefits can be claimed from age 62, this may not be the best age to begin claiming for most as it will result in a reduction to your benefits up until you reach your Full Retirement Age. For instance, if a full benefit at the Full Retirement Age of 67 is $1,800, claiming at 62 will result in a 30% reduction meaning that you will only receive $1,260. Similarly, claiming at 65 will result in a monthly benefit of $1,560.
Furthermore, a retiree who hold off on claiming beyond their Full Retirement Age can stand to benefit greatly. If you wait until age 70 to claim, you will earn “delayed retirement credits” which will allow for a higher monthly benefit amount. Using $1,800 as the base benefit at the Full Retirement Age, if a retiree claims at 70, they will receive around $2,232 every month which equates to around 124% of the base benefit.
The SSA also advises that “if you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within 3 months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.”