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Full Retirement Age: Is it the Best Time to Start Social Security Benefits?

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Your “Full Retirement Age” (FRA) is the age when you are entitled to full retirement benefits from Social Security. Your FRA is based on your birthday. It is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960, until it reaches 67.

The Full Retirement Age is the basis for determining your Social Security benefit. How much you can receive – no matter when you start benefits – is determined by calculations based on of your FRA benefit amount.

There are:

  • Penalties for starting Social Security before your FRA
  • Credits if you wait to start benefits after your FRA, up until age 70

No matter your Full Retirement Age (FRA), you are allowed to start Social Security benefits as early as age 62. However, depending on your FRA, your benefits will be reduced 25-30% if you start benefits at 62.

More specifically, according to the Social Security Administration, “In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.”

It is usually not a good idea to start early unless you think you won’t live very long. Typically, when you start early, you benefit from money now, but you are giving up a higher total payout over your lifetime.

Collecting Social Security early means you may be missing out on some of your benefits. Given retirees’ dependence on Social Security — it can represent up to 40% of a person’s total retirement income — older Americans should understand how delaying payments can maximize their benefits.

Starting Social Security at Your Full Retirement Age or After

Social Security benefits can increase up to 32% if you wait until age 70 to start collecting them. This may translate to an additional $300,000 in benefits over the course of a couple’s lifetime or $100,000 during an individual’s lifetime, says Kevin McGarry, director of the Nationwide Financial Retirement Institute (NFRI).

If you have reached what’s called “full” or “normal” retirement age, you can access 100% of your benefits.

And, for each year after that, up to age 70, your benefits increase 8%, meaning you can access 108% of your benefits at age 67, 116% at age 68, 124% at age 69 and 132% at age 70.

So collecting early versus collecting late could translate to a 76% difference in your monthly income, McGarry says. For example, if benefits are $1,000 a month at a full retirement age of 66, you would only receive $750 a month if taken early. If you decided to wait until age 70, you would receive $1,320 a month. So the late benefit is 76% greater than the early benefit.

The reality is that most people don’t wait to start collecting, and 38% of retirees wish they had waited longer, an NFRI survey reveals. Financial struggles, including the rising cost of health care, have many retirees regretting their decision to take their Social Security benefits early.

“When people retire, they don’t know what to do, so they draw from pensions, Social Security and investments, because that’s what they think they’re supposed to do,” says retirement planner Steven Van Metre, of the California-based firm Steven Van Metre Financial. “It often isn’t until later that they find out there are other strategies and options to increase their benefits.”

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