Filing for Social Security is an exciting milestone in life, and it's also one of the most important decisions you'll make in your retirement journey.
The age you begin claiming benefits will affect your monthly income for the rest of your retirement, so it's critical to choose wisely when deciding when to file. And there's one question you should have an answer for before you even consider claiming Social Security.
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What's your full retirement age?
Your full retirement age (FRA) is one of the most important figures to know before you begin claiming Social Security. However, only 13% of U.S. adults can correctly name their FRA, according to a 2022 survey from the Nationwide Retirement Institute.
Your FRA is the age at which you'll receive the full benefit amount you're entitled to based on your earnings throughout your career.
If you were born in 1960 or later, your FRA is 67 years old. If you were born before 1960, your FRA is either 66 or 66 and a few months, depending on your exact birth year.
Why your FRA is so important
When you know your FRA, it's easier to make an informed decision about what age to claim. You can file for benefits as early as age 62, but for every month you claim before your FRA, your benefits will be reduced. Also, if you wait beyond your FRA to file, you'll receive your full benefit amount plus a bonus each month.
For example, say you have an FRA of 67 years old. If you begin claiming at age 62, your monthly checks will be permanently reduced by 30%. But if you were to wait until age 70, you'd collect your full benefit amount plus an extra 24% each month for the rest of your life.
Knowing your exact FRA means you can accurately plan for how the age you claim will affect your benefit amount. If you're unsure of your FRA, you could receive less than you expect from Social Security.
In the Nationwide survey, the average baby boomer believed their FRA was 63 years old. Say, for instance, you began claiming benefits at age 63 expecting to receive your full benefit amount, but your actual FRA is 67 years old. In that case, your monthly checks would be permanently reduced by 25%.
Similarly, say that you decided to wait until age 67 to begin claiming benefits, thinking that you were delaying Social Security by four years. You may expect to receive larger payments each month when, in reality, you'll only receive your full benefit amount.
What's the best age to claim Social Security?
There's not necessarily a right or wrong answer as to when you should file for benefits. There are legitimate reasons for claiming Social Security as early as possible, while delaying benefits can help maximize your monthly payments.
The most important thing is that you know how your age will affect your benefit amount. With your FRA in mind, you'll have a more accurate idea of how much you'll receive from Social Security. That, in turn, can help you head into retirement as prepared as possible.
