The full retirement age for Social Security benefits is a crucial factor to consider when planning for retirement. It determines the age at which you can begin receiving full Social Security benefits, which can affect your retirement income. The full retirement age varies depending on your birth year, and it’s important to understand how it impacts your retirement planning.
For those born between 1943 and 1954, the full retirement age is 66. However, for those born after 1954, the full retirement age gradually increases in two-month increments until it reaches 67 for those born in 1960 or later.
It’s important to note that you can choose to start receiving Social Security benefits as early as age 62, but your benefits will be reduced if you start before your full retirement age. On the other hand, if you delay receiving benefits until after your full retirement age, your benefits will be increased.
Retirement Age and Social Security Benefits
Full Retirement Age
The Full Retirement Age (FRA) is the age at which a person can claim their full Social Security retirement benefit without any reduction. It is determined by the year of birth and ranges from 66 to 67 years old. For those born in 1960 or later, the FRA is 67.
Claiming benefits before reaching FRA will permanently reduce the monthly benefit while delaying benefits beyond FRA will increase the monthly benefit.
Social Security Benefits
Social Security retirement benefits are based on the Primary Insurance Amount (PIA), which is calculated using the average of the highest 35 years of earnings, adjusted for inflation. The PIA is the amount a person would receive if they claim benefits at their FRA. The monthly benefit amount can be reduced or increased depending on when a person claims benefits.
Taking Benefits
A person can claim Social Security retirement benefitsas early as age 62, but doing so will permanently reduce the monthly benefit. The reduction is based on the number of months before reaching FRA. For example, if a person claims benefits at age 62 with an FRA of 67, their monthly benefit will be reduced by 30%.
If a person continues to work while receiving Social Security retirement benefits before reaching FRA, their benefit may be reduced if their earnings exceed a certain limit. For 2023, the limit is $21,240. For every $2 earned above the limit, $1 will be deducted from the monthly benefit.
Delay Claiming
Delaying Social Security retirement benefits beyond FRA will increase monthly benefits. For every year a person delays claiming benefits, their monthly benefit will increase by 8% up to age 70. After age 70, there is no additional increase for delaying benefits.
For single filers, those with a combined income ranging from $25,000 to $34,000 will owe income taxes on a maximum of 50% of their Social Security benefits. If your combined income exceeds $34,000, taxes will be applicable on up to 85% of your Social Security benefits.
Monthly Payout
The monthly payout for Social Security retirement benefits varies depending on the PIA and when a person claims benefits. For example, a person with a PIA of $2,000 claiming benefits at age 62 would receive a monthly benefit of $1,400. In contrast, a person with the same PIA claiming benefits at age 70 would receive a monthly benefit of approximately $2,640 to $2,700.
Earned Income
A person can continue to work while receiving Social Security retirement benefits after reaching FRA without any reduction in benefits. However, their earned income may still be subject to Social Security payroll tax.
Working and Earning Income While Receiving Social Security Benefits
Earnings History
Your earnings history determines the amount of your Social Security benefits. The higher your earnings, the higher your benefit payment will be. You can view your earnings history on your Social Security statement.
Your work history is also important when it comes to Social Security benefits. You need to have earned certain credits to qualify for benefits. You can earn up to four credits per year based on your earnings.
Benefit Payment
Your Social Security benefit payment is based on your average earnings over your lifetime. If you continue to work and earn income while receiving benefits, your benefit payment may be adjusted based on your earnings.
Waiting
If you are not yet at full retirement age, you may want to consider waiting to start receiving Social Security benefits until you stop working or reduce your earnings. This can result in a higher benefit payment when you start receiving benefits.
Financial Well-being and Financial Plan
It is important to consider your overall financial well-being and create a financial plan that takes into account your Social Security benefits and any other sources of income or retirement savings.
30% Rule
One rule of thumb is limiting your work earnings to 30% of your Social Security benefit payment. This can help ensure that your overall income remains stable and that you do not have to pay back any benefits due to earning too much.
You can view your Social Security statement and earnings history on the My Social Security website. This can help you understand your benefit payment and plan for retirement.
Payroll Tax
If you continue to work and earn income while receiving Social Security benefits, you will still need to pay payroll taxes on your earnings. This can impact your overall income and should be taken into account when creating a financial plan.
Survivors and Social Security Benefits
Survivors
Social Security benefits are not only for retirees but also for survivors. When a worker dies, their spouse, children, and other dependents may be eligible for survivor benefits. Survivors can receive benefits based on the deceased worker’s earnings record, which can help provide financial support during a difficult time.
Survivor Benefits
Survivor benefits are calculated based on the deceased worker’s earnings record and the age of the survivor. A surviving spouse can receive full survivor benefits at their full retirement age or reduced benefits as early as age 60. Children and other dependents can also receive benefits, and the amount depends on their relationship with the deceased worker.
Longevity
Longevity plays a significant role in survivor benefits. If the deceased worker had not yet reached their full retirement age, their earnings record would be adjusted to account for the additional years they would have worked. This adjustment can increase the survivor benefits for the spouse and other dependents.
In summary, survivor benefits are an important part of Social Security benefits. Survivors can receive financial support based on the deceased worker’s earnings record. The amount of benefits depends on the survivor’s age and relationship to the deceased worker.
Congress and Social Security Law
Congress
The Social Security program was created by Congress in 1935 as part of the New Deal. Congress has the authority to change Social Security laws and regulations, and it has done so many times over the years.
Congress is responsible for setting the funding levels for Social Security and making any necessary adjustments to the program to ensure its long-term solvency.
Law
The Social Security Act is the law that governs the Social Security program. The law has been amended many times since its creation and is complex legislation. The law outlines the eligibility requirements for Social Security benefits, the calculation of benefits, and the rules for collecting benefits.
The law also establishes the Social Security Administration, which is responsible for administering the program.
Social Security Administration
The Social Security Administration (SSA) is the federal agency that administers the Social Security program. The SSA is responsible for processing Social Security benefit claims, calculating benefit amounts, and managing the Social Security trust funds. The SSA also provides information about the program to the public and enforces Social Security laws and regulations.
It is vital to note that the full retirement age is gradually increasing for those born after 1954. This means that if you were born after 1954, you may have to wait longer to receive your full Social Security benefits.
The Full Retirement Age (FRA) is the age at which you can receive your full Social Security retirement benefits. It varies based on your year of birth and is gradually increasing. For those born between 1943 and 1954, the FRA is 66.
For those born in 1955, it’s 66 and 2 months, and it increases by two months for each birth year until it reaches 67 for those born in 1960 or later.
Q. Can I Claim Social Security Benefits Before Full Retirement Age?
Yes, you can claim Social Security benefits as early as age 62, but your monthly benefit amount will be reduced. The reduction is based on the number of months you claim benefits before reaching FRA. For example, if your FRA is 66 and you claim benefits at age 62, your monthly benefit amount will be reduced by 25%.
Q. Can I Claim Social Security Benefits After Full Retirement Age?
Yes, you can delay claiming Social Security benefits until age 70, and your monthly benefit amount will increase by 8% each year you delay claiming benefits beyond your FRA. For example, if your FRA is 66 and you delay claiming benefits until age 70, your monthly benefit amount will increase by 32%.
Q. Can I Work and Collect Social Security Benefits at the Same Time?
Yes, you can work and collect Social Security benefits at the same time, but your benefits may be reduced if you earn more than a certain amount. The amount changes each year and depends on your age.
If you’re under FRA, your benefits will be reduced by $1 for every $2 you earn above the annual limit. If you’re over FRA, there is no earnings limit, and your benefits will not be reduced.
