Understanding the Social Security Retirement Age

• Social Security benefits are monthly amounts given to people who are retired, disabled, or widowed.
• The current retirement age is 67, though it is possible to take benefits as early as 62 or as late as 70, which affects benefits amounts.
• Multiple factors, such as life expectancy, whether you’re still working, and your marital status, must be considered when deciding when to take your benefits.

Social security payments are provided to those who are disabled, typically as lifetime benefits, as retirement income, or as survivor benefits to spouses who have lost a partner. To claim social security benefits, most people have to wait until they hit retirement age, which is based on their birth year.

Ahead, we’ll discuss how to determine your full retirement age (FRA) based on your year of birth, how to claim benefits, and how social security payments factor into retirement planning. We’ll also detail how to get specific advice on when to claim retirement benefits, because someone can delay claiming, which gradually raises the monthly amount they receive, or they may claim early, though monthly payments will be smaller.

Social security is a monthly financial benefit provided to people who are retired, disabled, or widowed. The benefits received depend on the circumstances and the person’s age. When a person decides to retire, they must apply for retirement using their social security card or another form of documentation.

The Social Security retirement age, or ​“full retirement age,” is when a person receives their full Social Security benefits. Determining when to begin receiving benefits depends, in part, on a person’s birthday. For example, those born in 1957 or earlier have already reached full retirement age.

Under current law, for those born in 1958 or later, the full retirement age can be between 66 and 8 months and 66 and 10 months, and for those born in 1960 or later, the age is 67. It’s important to note that the full retirement age is increasing gradually to reflect increases in life expectancy.This means that your full retirement age may be different than people in previous years.

The full benefit age is currently 66 years and 2 months for people born in 1955, and will gradually rise to 67 for those born in 1960 or later.

You can access your security benefits at different ages, each with its own stipulations and effects. Taking the benefits when you’ve reached your full retirement age will allow you to have the specified amount of your benefits, but some may choose to access benefits early or delay them based on their situations. Claiming early, even by a few months, may reduce the monthly benefit while when you delay taking social security benefits, you may be able to receive the maximum benefit.

Taking Social Security Benefits Early

Despite the full retirement age stipulations, it is possible to receive benefits as early as age 62. However, the benefits will be reduced by five-ninths of 1% each month before your full retirement age up to 36 months (after 36 months, the percentage goes up to five-twelfths of 1%). This permanent reduction can’t be undone, even once you reach full retirement age.

Taking the benefit early does have one incentive: despite the reduction, you can receive payments for a longer period than if you wait until full retirement age.

Delaying Social Security Benefits

You can also opt to delay receiving your social security and collect benefits after your full retirement age, up to age 70. If you choose to do this, you will usually earn a ​“delayed retirement” credit (DRC), which will be added to your benefit and last for the rest of your retirement.

This can be an ideal option for those wanting a higher benefit, though it’s important to note that you’ll receive these payments for a shorter time. Your circumstances will determine which option is best for you.

There are a few factors that can potentially change the amount of your benefit, such as:

• Taking Benefits Early or Delaying Benefits: As mentioned above, taking benefits early or later than the normal retirement age can reduce or increase your benefit amount.
• Cost of Living Increases: Regardless of whether you take benefits early or later, the ​“cost-of-living-benefit” increases starting the year you turn 62. This benefit will automatically be applied if there are any increases in the cost of living each year.
• Being a Government Worker With a Pension: A different formula may be used to calculate the average indexed monthly earnings for government workers with pensions. This is only under certain circumstances and may not apply to everyone in this category.

Note: To see if your retirement benefit is impacted as a government worker, visit this resource.

When you’re trying to decide which age is best for you to take out your retirement benefits, there are a few factors you’ll want to consider, including:

• Cash needs: If you’re in a position where you need cash earlier, taking benefits early could be an ideal option; however, the payments will be permanently reduced in the future.
• Life expectancy: If you’re in good health, you may decide to wait until full retirement age or delay benefits for a larger benefit. If you’re not in good health, you may opt to take payments sooner to receive them immediately. Consider your average life expectancy and how it may impact your decision on when to take Social Security benefits.
• Marital status: Your marital status can also factor into your decision. If you’re eligible for spousal benefits as a surviving spouse or ex-spouse and may receive it sooner, you may opt to delay your benefits so they will be higher later on. Additionally, if one spouse qualifies for benefits, married couples should discuss whether it’s best to take them sooner or later, as the younger partner will receive up to one-half of the qualifying spouse’s benefit (which won’t decrease your own retirement benefits).
• Employment status: If you plan to continue working once you reach retirement age, you may hold off on receiving benefits, depending on how much you make.

You’ll want to consider all factors and options to make an informed decision.

If your Social Security benefit is the only source of income, it’s usually not taxable.

However, Social Security benefits may be taxable depending on your ​“combined income.” Your combined income equals your adjusted gross income (AGI), plus nontaxable interest payments and half of your Social Security benefit.

According to the Social Security Administration, your benefits are taxable if you:

• File a federal tax return as an ​“individual,” and your combined income is
  • Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
  • More than $34,000, up to 85% of your benefits, may be taxable.
• File a joint return, and you and your spouse have a combined income* that is
  • Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits.
  • More than $44,000, up to 85% of your benefits may be taxable.
• Are married and file a separate tax return, you probably will pay taxes on your benefits.

If your benefits are taxable, you can withhold federal taxes to reduce or avoid paying taxes in the future.

Note: For more information on withholding federal taxes from your benefits, check this resource.

Your annual Social Security statement lists your projected benefits between age 62 and 70, assuming you continue to work and earn about the same amount through those ages. You can request a copy of your annual statement or view it online on the Social Security Administration (SSA) portal.

According to the Social Security Administration, the amount of your monthly benefit is determined by calculating a few different financial aspects:

• The base Social Security benefits on your lifetime earnings
• The adjusted earnings to account for changes in average wages since the year the earnings were received
• The average indexed monthly earnings during the 35 years in which you earned the most

A formula is applied to these figures to determine your Primary Insurance Amount (PIA). This is your monthly benefit amount.

Note: To learn more about your retirement benefits, visit this source.