In the United States, full retirement age actually varies depending on the year you were born. But if you were born in 1960 or later, your full retirement age is 67. Full retirement age (FRA) is the age at which you become eligible to receive your full retirement, or Social Security benefits. FRA is a key milestone in life and a crucial component of the U.S. Social Security system.
It impacts how much you’ll receive monthly, when you can claim Social Security in full, and how much your delayed retirement credits will increase over time. Your Social Security benefits will, likely, also have an effect on the decisions you make around your strategies for saving and investing for retirement, too.
Key Points
• Full retirement age varies depending on birth year. It ranges from 66 for those born from 1943 to 1954 to 67 for those born in 1960 or later.
• You can claim your Social Security benefits before FRA (as early as age 62), but your benefit will be permanently reduced by up to 30%.
• You can delay your retirement to increase your monthly benefit by 8% for each year of delay (up until age 70).
• You can still work after you’ve started collecting Social Security retirement benefits. But if you’re younger than FRA and earn above certain limits, your benefits may be reduced. There’s no earnings limit once you reach FRA.
What is Full Retirement Age?
Full retirement age (FRA) is the age at which you become eligible to receive 100% of your monthly primary insurance amount (PIA), which is the starting point for calculating your Social Security retirement benefit.
The PIA is the base monthly payment you should receive once you retire. It’s based on your past earnings and adjusted for inflation. In general, here’s how it works:
• If you retire once you’ve reached your exact FRA, you’ll receive 100% of your PIA.
• Retiring earlier will reduce your monthly Social Security retirement benefit to a smaller percentage of your PIA (but no less than 70% of it — more on this later).
• Conversely, if you delay retirement beyond your FRA, your Social Security retirement benefit will be a higher percentage of your PIA.
The bottom line is that because your Social Security retirement benefit is permanently set based on when you retire relative to your FRA, knowing your FRA is extremely important. Even if you’ve done some planning and opened an online IRA or other retirement account.
And, as noted, having an idea of what you can or should expect from your Social Security benefits can have a profound impact on your strategies as they relate to investing for retirement. Since many people may hope to supplement their Social Security income with their own savings and investment income, it can change the calculus in terms of when you’re able to retire.
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Determine Your Full Retirement Age
As mentioned, FRA varies depending on your birth year. If you were born in 1960 or later, your FRA is 67. For those born before 1960, FRA decreases by two months for each year earlier, down to 66 for those born between 1943 and 1954.
Here’s a table to clarify the math:
|
Social Security Retirement Age Chart |
|||||
|---|---|---|---|---|---|
| Year of Birth | Full Retirement Age | Months between 62 and FRA | Maximum PIA reduction if you retire at 62 | Months between 70 and FRA | Maximum PIA increase if you retire at 70 |
| 1943 to 1954 | 66 | 48 | -25% | 48 | +32% |
| 1955 | 66 and 2 months | 50 | -25.83% | 46 | +30.67% |
| 1956 | 66 and 4 months | 52 | -25.67% | 44 | +29.33% |
| 1957 | 66 and 6 months | 54 | -27.5% | 42 | +28% |
| 1958 | 66 and 8 months | 56 | -28.33% | 40 | +26.67% |
| 1959 | 66 and 10 months | 58 | -29.17% | 38 | +25.33% |
| 1960 and later | 67 | 60 | -30% | 36 | +24% |
| Source: Social Security Administration | |||||
Why Full Retirement Age Matters
FRA is a key factor in deciding when to start collecting Social Security benefits. Claim them too early, and your monthly check will be permanently reduced. Wait too long, and you won’t get any additional benefits. So, if you’re trying to figure out how to retire early, this could become a key piece of information in your calculations.
As mentioned, you’ll receive 100% of your PIA if you retire exactly at your FRA. You can apply for Social Security and start collecting earlier, but no earlier than age 62. And your benefits will be reduced for each month you begin early. How much? Here’s a recap:
• 5/9 of 1% for each month up to 36 months before your FRA
• 5/12 of 1% for each month over 36 months before your FRA
For example, if your FRA is 67, and you retire at 65 (i.e., 24 months earlier), your benefits will be reduced by:
24 months x 5/9 x 1% = 13.33%
That means your monthly benefit will be (100 – 13.33)% = 86.67% of your PIA.
If that sounds too complicated, you can check the retirement age calculator on the Social Security Administration (SSA) website.
But that’s not all. If you retire earlier than 65, the age of eligibility for Medicare, you may need to pay for your own healthcare coverage until you turn 65. If your previous job included medical benefits and you retire before becoming eligible for Medicare, you may have to pay a monthly premium to maintain coverage during this interim period. This could increase your expected expenses in retirement.
Regardless, it may be a good idea to enroll in Medicare when you turn 65 or risk paying a late enrollment penalty when you do sign up. Make sure to factor this into your calculations.
If you retire later instead, delaying your retirement beyond your FRA will earn you more money in the form of delayed retirement credits (DRCs), which increase your monthly benefit. If you were born in 1943 or later, you’ll earn a 2/3 of 1% (roughly 0.67%) increase for each month after FRA, equating to an 8% increase per year. You can keep earning these benefits only up until age 70, so there’s no financial reason to wait beyond this age.
For example, if your FRA is 66 and you wait until 68 to retire, you will earn an increase of:
24 months x 2/3 x 1% = 16%
That means your monthly benefit will be (100 + 16)% = 116% of your PIA.
When to Start Collecting Social Security
Given that the average retirement age in the U.S. is 65 for men and 62 for women, many Americans do choose to retire before reaching full retirement age. But there’s no one-size-fits-all answer for when it’s the right time to choose to retire and start collecting Social Security benefits. It depends on several factors.
First, you should honestly assess your health situation.
• Is your life expectancy short or long?
• Are you in good enough health to keep working and earning?
• Do you have persistent health issues that require the best possible health insurance coverage?
• Do you have the means to pay for private insurance if you retire before you’re eligible for Medicare?
Your answers to these types of questions will steer you in the direction.
Additionally, if you’re the higher-earning spouse, your surviving partner might continue receiving your benefits for many years after your passing. In that case, it could make sense to wait to maximize their future benefits — especially if they’re younger than you.
Other considerations like immediate income needs, if you have money in a Roth IRA, the potential for reduced expenses in retirement, or foreseeable job instability (such as concerns about your employer’s financial health) might mean early retirement is the right call.
Further, it may be worthwhile to investigate how a traditional IRA or other type of retirement plan could affect your plans as well.
Early Versus Late Retirement
Here’s a quick recap of the pros and cons of waiting to claim benefits until after FRA versus before FRA:
|
Claiming Benefits Before FRA |
|
|---|---|
| Pros | Cons |
| Access to income sooner | Permanently reduced monthly benefits |
| Better if your life expectancy is shorter or you suffer from health issues | Reduced spousal and survivor benefits |
| Useful if your job stability is uncertain | Might need to pay for private health insurance until Medicare eligibility at 65 |
|
Claiming Benefits After FRA |
|
| Pros | Cons |
| Permanently increased monthly benefits | Access to income is delayed |
| Higher survivor benefits for your spouse | Risky if you have health issues |
| Potential for higher lifetime income | Can impact your lifestyle or quality of life |
Working After Reaching Full Retirement Age
You can keep working and collecting a paycheck after reaching full retirement age. If you keep working after hitting your FRA, your Social Security benefits won’t take a hit. However, if you claim benefits earlier, the government might temporarily withhold some of the benefits until you reach your FRA.
In particular, you might face one of three scenarios:
1. If you’re under FRA for the entire year, you can earn up to $22,320 (in 2024) without any benefit reduction.
2. If you earn more than $22,320, the SSA will deduct $1 from your benefits for every $2 you earn above this limit.
3. In the year you reach FRA, the earnings limit increases to $59,520 (for 2024). The SSA will deduct $1 from your benefits for every $3 you earn above this limit. Only earnings up to the month before you reach FRA count toward this limit.
This provision is known as the retirement earnings test (RET) and is periodically adjusted to account for inflation.
Once you reach FRA, the SSA will recalculate your benefits to account for the months when benefits were withheld due to excess earnings. So, while you don’t get a lump sum back, you do get higher payments for the rest of your life.
The Takeaway
Choosing the right time to apply for Social Security has a tremendous impact on your retirement strategy. Understanding what your full retirement age is factors heavily into this decision since it essentially defines the timing of your retirement. Whether you claim benefits early, at your FRA, or later will affect the amount of your checks. That will also come into play when seeing how far your savings and investments will take you, when paired with your Social Security benefits.
As you plan for your retirement, consider a savings strategy that can potentially offer you compound growth. SoFi Traditional IRAs or Roth IRAs allow you to invest your way. With investment options like stocks, ETFs, and more, you can invest your way. Save, invest, and watch your money grow as you work toward a secure and comfortable retirement.
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FAQ
How does age affect my Social Security benefits?
Your Social Security benefits will be reduced by a percentage if you claim them before your full retirement age (FRA) and increased if you delay claiming them. The earlier you claim before FRA, the greater the reduction, the longer you wait, the higher the increase (up until age 70).
Can I choose to receive Social Security benefits earlier than full retirement age?
Yes, you can start receiving benefits as early as age 62, but the earlier you claim them, the more they will be reduced. Note that this reduction is permanent.
What is the significance of the full retirement age increase?
The increase in FRA means you must work longer to claim 100% of your benefits. For example, people born in 1954 could earn full benefits at age 66, while those born in 1960 or later must wait until age 67 for unreduced benefits.
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