Born in 1959? You might want to relook at your Social Security retirement plans. There is a new update to the Full Retirement Age (FRA), this is the age at which you can collect your full Social Security benefits, and this age has increased again.
The new FRA for individuals born in 1959 is 66 years and 10 months, whereas previously, persons could get their entire benefits at age 66. It will formally be 67 years old, beginning with individuals born in 1960 and beyond.
Even while it might not seem like much, those extra months might have an impact on your monthly income, particularly if you choose to begin collecting early.
What “Full Retirement Age” Really Means
Your FRA is the age where you can receive 100% of your Social Security benefits. Yes, you can start collecting benefits earlier, at age 62, but should you do this, your benefits will be permanently reduced.
For example:
- If your FRA is 67 and you start benefits at 62, you’ll lose about 30% of your monthly amount permanently.
- If you delay past your FRA, your payments increase by about 8% for every year you wait, up until age 70.
From this, it can be noted that choosing when to collect benefits can determine how much benefits you receive.
What This Means for People Born in 1959
If you were born in 1959, your FRA is 66 years and 10 months. In simple terms, this means that you’ll have to wait a bit longer than the people who were born just a few years before you, to collect your full Social Security benefits.
Here’s what that looks like in real numbers:
- Claim at 66 years, 10 months- You’ll get your full benefit.
- Wait until 70 – You’ll get the maximum out of your benefits.
Why the Retirement Age Keeps Going Up
Now, why is this happening you may ask? Well Social Security was created in the 1930s and back then, the average American did not live much longer than their early 60s. However, in today’s day and age, people are living into their 80s and some, longer.
As a result of this, the government is now slowly increasing the FRA to help keep the Social Security system stable in terms of finance. Simply put, the longer people live, the longer the government needs to make the money last.
But not everyone is in favour of this change. Raising the FRA, according to critics, affects individuals who work in physically demanding occupations or who cannot afford to wait longer to retire.
What You Can Do Right Now
If you were born in 1959, here are a few things you can do to make sure you’re ready:
- Be sure to check your benefits by logging into your online Social Security account and check your monthly payment at different ages.
- Make sure you plan ahead by taking into consideration your health and financial situation.
- If you’re married, timing your benefits together can increase your total household income.
- If possible, try waiting to collect your benefits at FRA or even age 70 to ensure that you get the maximum out of your benefits.
The Bottom Line
There are millions of Americans who rely on Social Security as their primary source of income and it’s important that the SSA constantly looks at ways to ensure that the program is sustained for future generations.
The FRA being increased serves as a reminder for beneficiaries to plan ahead and make wise decisions to secure their financial future. Whether you retire early, on time, or later, knowing how the system works will help you make the best financial decision for your future.