What is full retirement age and why it matters

Navigating Social Security can feel like a maze of numbers and timelines. But your full retirement age is more than just a number — it’s the age when you qualify for 100 percent of the Social Security benefits you’ve earned through decades of work.

In this article, we’ll unpack what full retirement age is, how it impacts your monthly checks and key considerations that can help you make the most of your Social Security benefits.

Here’s everything you need to know.

What is full retirement age?

The Social Security Administration (SSA) sets a full retirement age (FRA) for everyone based on their birth year. This is the age when you’re eligible to receive 100 percent of your Social Security retirement benefits based on your lifetime earnings.

The SSA considers FRA to be the age when most people claim benefits. But you don’t have to claim them then. You have the flexibility to claim earlier or later, which changes the monthly payment amount you receive.

What’s my full retirement age?

Your full retirement age is based on the year you were born. It used to be 65 for everyone, but because Americans are living longer, the program faces funding challenges. Congress raised the FRA in 1983 to 66-67, staggered in two-month increments depending on birth year.

Age to receive full retirement benefits

How claiming before or after full retirement age impacts your benefits

The age at which you start claiming Social Security benefits has a lasting effect on your monthly checks. Here’s a breakdown of how it works.

Claiming benefits early

You can start receiving Social Security benefits as early as age 62. However, claiming early permanently reduces your monthly benefits. The reduction can be substantial, especially if you claim several years before your FRA.

The SSA will reduce your benefits by a certain percentage for each month you’re under FRA. If you retire 36 months or less before full retirement age, your benefit is decreased by 5/9 of 1 percent per month. If you retire more than 36 months before full retirement age, your benefit is further reduced 5/12 of 1 percent per month.

For example, if you were born in 1960 or later and file for Social Security as soon as you’re eligible at age 62, your monthly benefit would see a 30 percent haircut. That would lower a $1,000 monthly payment to $700 a month. That’s a big hit for taking benefits five years early.

While early Social Security claims offer immediate financial relief, you’ll be stuck with lower monthly payments for life. If you expect to live a long life, waiting to claim benefits might make more sense. If you’re uncertain about which strategy might work best for you, a financial advisor can help. Bankrate’s AdvisorMatch tool can connect you with an advisor who will help you make the right decision.

Something else to consider: If you start receiving Social Security before your full retirement age and continue to work, your benefits may be reduced if you earn above a certain limit. But once you hit your FRA, you can work without impacting your benefits, and your benefit will increase to account for any benefit that was withheld earlier due to working.

Here’s how Social Security benefits are calculated. Also, see Bankrate’s breakdown of the average Social Security check.

Claiming benefits after full retirement age

If you’re able to work longer and delay claiming Social Security beyond your full retirement age, you’ll receive even bigger monthly payments. These delayed retirement credits can significantly boost your monthly checks.

For each month you delay claiming Social Security, your benefits increase, up to age 70, when you’ll reach your maximum payout.

For people born in 1943 or later, your benefit increases by two-thirds of 1 percent for each month you delay claiming benefits past your full retirement age, or 8 percent for each additional year.

Here’s an example.

Let’s say you were born in 1960. If you wait until age 68 (one year past FRA), your monthly check will be 8 percent higher than if you retired at 67. If you wait until age 70, your benefit will be 24 percent higher.

Your monthly benefits will be further boosted by annual cost-of-living adjustments (COLAs), which help protect your retirement income from inflation.

Once you reach age 70, you can’t earn any more delayed retirement credits. This is the SSA’s way of incentivizing people to wait, but not delay indefinitely.

Delaying makes the most sense if you’re in good health, have other income sources and expect to live into your 80s or 90s.

How to estimate your benefits at full retirement age

The Social Security Administration calculates your monthly benefit based on your highest 35 years of earnings. You can estimate your benefits by:

• Creating an account on the Social Security website to view your projected benefits.
• Using the SSA’s Online Benefits Calculator, which lets you run different scenarios based on the age you retire.

When should you claim Social Security?

Choosing when to take Social Security is a major decision. You’ll need to consider multiple factors and think hard about your finances and longevity — two topics many people have a difficult time addressing.

Here are key factors to consider when deciding when to file for benefits: 

• Your health. If you’re in good health and have a family history of longevity, delaying benefits might make sense so you can maximize your payout.
• Income needs. If you need income sooner rather than later, claiming at 62 could make sense, but remember, your monthly benefit will be smaller for life.
• Employment status. If you plan to keep working, consider how earnings might reduce your benefits if you claim before full retirement age. 
• Your spouse. Married couples can work together to optimize spousal and survivor benefits by timing when each person claims Social Security. 
• Other retirement income. If you can draw from a retirement plan, savings, investments or other income, you might be able to afford to wait and boost your benefit amount.

Once you file for Social Security, your monthly payment is set — though it may increase slightly each year with cost-of-living adjustments.

However, if you start taking benefits before your full retirement age, you have a 12-month window to reverse your decision by withdrawing from the program. Keep in mind, though, that you’ll need to repay any benefits you’ve received. This option allows you to claim benefits at a higher amount down the road.

Bottom line

Your Social Security full retirement age is more than just a number; it’s a key factor in your retirement planning decisions. By carefully considering your personal finances, health, life expectancy and employment status, you can make strategic decisions to maximize your Social Security benefits and secure a comfortable retirement.