Full Retirement Age: What It Is And Why It Matters

federal workers - Aubrey Lovegrove

The Full Retirement Age (FRA), also called “normal retirement age,” refers to a certain age a US citizen must reach to be eligible for receiving the full Social Security benefits. However, an individual’s date of birth determines the FRA, which is why it is not the same for everyone.

An individual must be aware of their FRA, as it plays as the primary factor whether one would be able to claim 100% of their retirement benefit or not. This fact serves as enough driving reason to identify their full retirement age.

Those who were born on and before 1937 reached full retirement age at 65. As for individuals born between 1938 and 1960, age gradually increased from 65 years and two months to 67 years old. The primary reason for increasing the retirement age is due to improvements in the health of older people and the increase in average life expectancy.

Why It Matters For An Individual To Identify The Full Retirement Age?

While it’s apparent that FRA determines the amount of retirement benefit to receive, there are other reasons why everyone should check their exact retirement age.

  • FRA is essential to determine the age where a person can start collecting their Social Security benefits, a figure based on the person’s recorded monthly earnings or AIME.
  • It allows people to work while receiving Social Security benefits without any reduction in their income.
  • A person’s benefit will become lesser if they claim their Social Security benefits before FRA.
  • For married people, in a lot of cases, the spouse who earned the most, wait until FRA or later to begin the benefits. Claiming at the right time will result in a higher payout for beneficiaries. Married couples should plan their claiming decision to put themselves in the most secure position.

Early Retirement

It is considered an early retirement when citizens collect their Social Security retirement benefits before their FRA. The earliest age a person can begin receiving their Social Security retirement benefits is 62 up to age 70, a number past the full retirement age.

A person can start to apply for benefit claims at age 61 years and nine months old. The concerned branch processes the application in a maximum of four months before the beginning of scheduled benefits. One can expect to receive their first payment four months after the month after their birthday, shall they decide to claim their benefits at age 62.

But in some cases, not everyone who turns 62 can automatically claim the benefits. Only around 7% among the early retirees can start receiving Social Security payouts the month they turn 62. Those who weren’t born on the first or second day of a month can’t file for a claim until the month after they celebrate their birthday.

What Happens If You Claim Before Your Full Retirement Age

If you decide to retire before the maturity of FRA, the monthly payouts will be lower compared to those older, full-age retirees.

Those who retire at age 62 will get 75% of the benefit they are entitled to at an FRA of 67, as long as any other retirement income is below a certain threshold. The first 36 months before FRA brings down the benefits by 5/9 of 1% per month. On the other hand, each additional month before 36 months before full retirement age, the benefits will go down by 5/12 of 1% every month.

For each of the first three years before reaching FRA, the benefits will reduce to around 6.67% based on a formula used by the Social Security Administration (SSA). In other words, you will not get the hundred percent benefits you should have acquired on your FRA.

Although more money is usually better, there are cases where it might be better to start collecting your benefits sooner. If your health is failing, then filing prior FRA is a smart move. Planning for healthcare costs in retirement is essential, so you may need the extra money that Social Security benefits provide.

For others who are healthy and have a lot of energy in their first stage of retirement, they spend more money on their hobbies, travel, entertainment, and lifestyle. As a result, many early retirees will need increased cash flow during the previous years of retirement and less as they get older. It makes sense if you want to enjoy your retirement while your body is still healthy and able to do various activities.

What Happens If You Claim The Benefits At Full Retirement Age? 

Claiming the benefits upon reaching full retirement age will guarantee a standard amount based on your covered earnings and contributions, with no deductions. However, if you file for application months before you reach FRA on that year, a dollar for every $3 you earn gets deducted from your benefits.

Reaching FRA while working and retiring shortly afterward, is the most recommended option, especially if you have no plans on where to use the social security money.

What Happens If You Claim Your Benefits After Full Retirement Age? 

Waiting past FRA will entitle you to 132% of the total benefit. But keep in mind that your total payout will not increase any further after the age of 69. As such, there is no point in waiting to claim the benefits when you’ve turned 70. However, throughout FRA and the ripe age of 70, benefits will continue to increase for each month that you wait to claim them. For retirees born in 1943 or later, the benefits increase by a total of 2/3 of 1% for every month past FRA.

Should You Make A Claim On Or Before Or Past FRA?

Claiming your Social Security entitlements before FRA due to health issues and other personal challenges may seem like a practical decision. Filing after FRA is also suitable for those who have excellent health and would still enjoy their retirement money in the years to come. However, it is a recommendable choice for everyone to wait and claim as soon as they have reached their full retirement age for maximum benefits and enough time to enjoy life with the money you received from your social security.

FERS Federal Employee Retirement Earnings

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