One of the greatest things about Social Security, is that it’s flexible;
Once you reach age 62, you can decide when to start your benefits. If you take them early, you’ll get less. If you take them later, you’ll get more.
So what determines taking them early versus taking them later?
That’s where your full retirement age comes in. Your full retirement age, is the age at which the social security administration will pay you 100% of your calculated benefit.
If you take your benefits earlier than your full retirement age, your benefit will be reduced by 25%. The percentage will gradually reduce every year you wait until your full retirement age. You’ll receive a rough 8% annual increase for each year you wait after your full retirement age.
So you’re probably wondering what YOUR full retirement age is.
That age is based on the year you were born. Looking at the chart, for those born between 1943 and 1954, your full retirement age is 66, meaning if you wait to take your benefits at age 66, you’ll receive 100% of your calculated benefit.
It gets a little trickier for those born between 1955 and 1959 because the administration went through a recalculation to keep the system alive. To please the public, they slowly increased the minimum age from 66 to 67 in annual increments of 2 months.
As you can see in the chart, those born in 1955 have a full retirement age of 66 and 2 months, but for those born in 1956, it’s 66 and 4 months.
Moving on down, if you were born in 1959, your full retirement age is 66 and 10 months. So you can see the 2 month increase for every year between the years 1955 and 1959.
Anyone born 1960 and later, your full retirement age is 67.
One common question is “will the full retirement age be increased in the future like it was for those born between 1955 and 1959?” Our answer – is “yes”, and that is based on the systems annual deficit, and the fact this was the second time in history the administration has used the method to recalculate benefits. The other time, was in 1938 to 1942. They used the same 2 month increase to ease the program into legislation.