It has been many years since age 65 was routinely the full retirement age (FRA). Except for people born in 1937 or earlier, FRA is after age 65. The legislative change to FRA was included in the Social Security Amendments of 1983 signed into law by President Reagan. Although this change took place years ago, many people still do not know about it. Let’s look at an example for someone who will be 65 in March 2015. Because of the change, starting Social Security retirement benefits in March results in a reduced benefit because he will still be younger than his full retirement age (FRA) of 66. The way to avoid a reduced Social Security retirement benefit is by waiting to start receiving benefits until reaching full retirement age.
When you reach age 62, you can start your SSA retirement with any month you chose. Choosing to begin receiving Social Security retirement at age 62 results in a reduced benefit.
Any reduction or increase in the benefit amount depends on the number of months that you start before or after your full retirement age (FRA). Reductions are permanent but any cost of living adjustments are added to your benefit amount.
In the Retirement Planner, you can use the “Find your retirement age” chart to find your own full retirement age (FRA). In addition to providing a FRA, this chart also shows the month-by-month percentage of reduction from age 62 to FRA. Each full retirement age has slightly different reduction percentages because the number of months from age 62 to the FRA will be different for different FRA’s.
You can find more information and calculators here: http://www.socialsecurity.gov/retire2/ . You can use the Retirement Estimator to obtain your approximate full retirement age (FRA) amount based on your own work record. http://www.socialsecurity.gov/retire2/estimator.htm
Another section of the Retirement Planner contains a table showing the effect of early or delayed retirement (click on the link at the bottom of this page: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html ). It shows the benefit as a percentage of the full retirement age amount at various ages. Locate your full retirement age (Normal Retirement Age) next to your year of birth. As you move to the right, you will see the percentage of the full amount you would receive. For example, if you were born between 1943-1954, your full retirement age is 66. You can see from the chart that at age 62 you would receive 75% of your full benefit amount. Waiting to start until age 66 would provide you with 100% of your full retirement age benefit. If you chose to defer it and start at 70, you would receive 132% (32% increase) in your benefit amount. For purposes of comparison, other ages shown are 63, 64, 65, and 67.
Using these website tools can help you get more detailed information to use in your future retirement planning. You can make sure that you know what your full retirement age is and review what your amount would be if you decide to take it early or to defer it. Good planning starts with good tools and information. Be sure and share ours with your colleagues, friends and neighbors.