When it comes to claiming Social Security, you get choices. You're allowed to begin collecting benefits as early as age 62, or you could sign up as late as age 70. Technically, you can even file for benefits beyond the age of 70, though financially speaking, delaying your claim past your 70th birthday makes little sense.
The age at which you file for Social Security will determine how much monthly income the program provides you with. So you shouldn't even begin to think about signing up for benefits if you can't answer one essential question.
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What's my full retirement age?
You may not be familiar with the term "full retirement age," or FRA for short. But it's an age you must learn if you want to claim Social Security strategically.
The monthly Social Security benefit you'll be entitled to collect during retirement is calculated based on your personal wage history -- specifically, your average monthly wages, adjusted for inflation, over the course of your 35 highest-paid years in the labor force. You're then eligible to collect that benefit once you reach FRA.
You're allowed to sign up for benefits before FRA. But for each month you claim them early, they'll be reduced on a permanent basis.
Similarly, you can delay your Social Security filing past FRA and score a higher monthly benefit in the process. But if you don't know your FRA, you'll have a harder time figuring out when to sign up if your goal is to raise your benefits.
There's no weird formula to determine your FRA. All you need to do is consult this table:
|
Year of Birth |
Full Retirement Age |
|---|---|
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 or later |
67 |
Data source: Social Security Administration. Chart by author.
Should you claim Social Security at FRA?
Filing for benefits at your precise FRA can make sense -- but not always. If you don't have a lot of money in retirement savings, delaying your filing past FRA is a good way to compensate. You can accrue delayed retirement credits up until the age of 70, but not past that point. If your FRA is 67, for example, you have the potential to score a 24% boost to your Social Security paychecks.
Remember, delaying your filing by even a few months will result in a boost to your benefits, albeit a small one. But if you think you'll need the extra money, that makes sense.
On the flip side, let's imagine you've saved really well for your senior years and are sitting on a very substantial nest egg. At that point, your Social Security income may not play as large a role in your retirement finances. So you may decide to claim benefits before FRA if doing so allows you to retire early or meet other personal goals, like getting to travel the world while you're still on the younger side.
The point, rather, is that you can't make an informed filing decision without knowing your FRA. So whether you're on the cusp of retirement or nowhere near, be sure to learn that number and commit it to memory.
