Turning 65? Find out why you might not get full Social Security benefits yet.
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As the candles on the birthday cake increase for many Americans reaching the milestone age of 65, there's a growing realization that this number doesn't hold the same retirement promise it once did.
A significant demographic shift is underway, with a record number of Americans turning 65 each year through 2027.
However, reaching this age doesn't automatically unlock the full Social Security benefits that many anticipate.
Back in 1983, Congress made a pivotal decision to gradually increase the full retirement age (FRA) to 67 from 65. This change was driven by the fact that people are living longer, and the hope was that extending the retirement age would help stretch the Social Security funds that were depleting.
Now, as we find ourselves in the midst of this transition, those born in 1960 or later are facing the reality that 67 is the new benchmark for full benefits.
Understanding the Full Retirement Age (FRA)
The concept of FRA can be a bit of a moving target, as it's determined by your birth year. Here's a quick guide to help you figure out when you'll reach your FRA:
Remember, if you were born on January 1, you should refer to the FRA for the previous year.
While you can start receiving Social Security benefits as early as age 62, doing so means accepting a reduced amount.
The closer you are to your FRA, the smaller the reduction will be. For instance, if you turn 62 in 2025 and decide to take benefits then, you're looking at a reduction of about 30% compared to waiting until you're 67.
Some financial gurus, like Dave Ramsey, suggest that taking Social Security early and investing it could potentially offset the reduced benefit amount.
The stock market, with its average annual return of around 10%, could be a way to make up for the shortfall. However, this strategy isn't without risk and depends on market performance and individual financial circumstances.
Health issues can also force people into early retirement. In such cases, the SSA advises applying for Social Security disability benefits, which amount to the same as a full, unreduced retirement benefit.
Once you reach your FRA, these disability benefits seamlessly convert into regular Social Security benefits.
Patience can pay off when it comes to Social Security. For every year beyond your FRA that you delay taking benefits, you'll see an 8% increase up until age 70.
“This is where a lot of value can be gained by waiting to file for benefits,” notes financial expert Rizzuto. Of course, this strategy requires having other assets and income to tide you over until you decide to claim Social Security.
Moreover, if you continue to work past your FRA, each additional year of earnings can potentially increase your benefits, as Social Security calculations are based on your highest-earning 35 years.
Despite the financial advantages of waiting, the majority of people still begin receiving Social Security benefits before reaching their FRA.
According to a 2024 Employee Benefit Research Institute (EBRI) survey, the median retirement age is 62, and the median age for collecting Social Security is 64. This is despite many workers intending to wait until at least 65.
The survey also found that many retirees leave the workforce earlier than planned due to hardships such as health problems, company changes, or simply because they can afford to retire early.
As of January 2025, the estimated average Social Security benefit was $1,976, a stark contrast to the $207 average benefit back in 1975. This figure is subject to change and is influenced by various factors, including inflation and changes in average earnings.
We'd love to hear from our readers. Are you approaching retirement with concerns about Social Security? Have you made plans to navigate these changes? Share your thoughts and strategies in the comments below!
A significant demographic shift is underway, with a record number of Americans turning 65 each year through 2027.
However, reaching this age doesn't automatically unlock the full Social Security benefits that many anticipate.
Back in 1983, Congress made a pivotal decision to gradually increase the full retirement age (FRA) to 67 from 65. This change was driven by the fact that people are living longer, and the hope was that extending the retirement age would help stretch the Social Security funds that were depleting.
Now, as we find ourselves in the midst of this transition, those born in 1960 or later are facing the reality that 67 is the new benchmark for full benefits.
A record number of Americans are turning 65 each year, but that's not old enough for full Social Security benefits due to a law raising the full retirement age to 67 for those born in 1960 or later. Image source: Towfiqu Barbhuiya / Unsplash.
Understanding the Full Retirement Age (FRA)
The concept of FRA can be a bit of a moving target, as it's determined by your birth year. Here's a quick guide to help you figure out when you'll reach your FRA:
- Born between 1943-1954: FRA is 66 years.
- Born in 1955: FRA is 66 years and two months.
- Born in 1956: FRA is 66 years and four months.
- Born in 1957: FRA is 66 years and six months.
- Born in 1958: FRA is 66 years and eight months.
- Born in 1959: FRA is 66 years and 10 months.
- Born in 1960 or later: FRA is 67 years.
Remember, if you were born on January 1, you should refer to the FRA for the previous year.
While you can start receiving Social Security benefits as early as age 62, doing so means accepting a reduced amount.
The closer you are to your FRA, the smaller the reduction will be. For instance, if you turn 62 in 2025 and decide to take benefits then, you're looking at a reduction of about 30% compared to waiting until you're 67.
Some financial gurus, like Dave Ramsey, suggest that taking Social Security early and investing it could potentially offset the reduced benefit amount.
The stock market, with its average annual return of around 10%, could be a way to make up for the shortfall. However, this strategy isn't without risk and depends on market performance and individual financial circumstances.
Health issues can also force people into early retirement. In such cases, the SSA advises applying for Social Security disability benefits, which amount to the same as a full, unreduced retirement benefit.
Once you reach your FRA, these disability benefits seamlessly convert into regular Social Security benefits.
Reduced Social Security benefits can be claimed as early as age 62, but the benefit amount is permanently lower compared to waiting until full retirement age. Image source: Diana Parkhouse / Unsplash.
Patience can pay off when it comes to Social Security. For every year beyond your FRA that you delay taking benefits, you'll see an 8% increase up until age 70.
“This is where a lot of value can be gained by waiting to file for benefits,” notes financial expert Rizzuto. Of course, this strategy requires having other assets and income to tide you over until you decide to claim Social Security.
Moreover, if you continue to work past your FRA, each additional year of earnings can potentially increase your benefits, as Social Security calculations are based on your highest-earning 35 years.
Despite the financial advantages of waiting, the majority of people still begin receiving Social Security benefits before reaching their FRA.
According to a 2024 Employee Benefit Research Institute (EBRI) survey, the median retirement age is 62, and the median age for collecting Social Security is 64. This is despite many workers intending to wait until at least 65.
The survey also found that many retirees leave the workforce earlier than planned due to hardships such as health problems, company changes, or simply because they can afford to retire early.
As of January 2025, the estimated average Social Security benefit was $1,976, a stark contrast to the $207 average benefit back in 1975. This figure is subject to change and is influenced by various factors, including inflation and changes in average earnings.
We'd love to hear from our readers. Are you approaching retirement with concerns about Social Security? Have you made plans to navigate these changes? Share your thoughts and strategies in the comments below!
