If you're turning 66 this year, you may be eager to claim Social Security -- especially if you've heard that you can get your standard benefit once you reach that milestone.
The reality, though, is that while 66 is an important age in the world of Social Security, you can't just claim your benefit in January even if the big birthday is this year. In fact, if you want to claim Social Security without any penalties for an early claim, you might actually have to wait until 2025. Here's why.
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Waiting to claim Social Security could be very important
When you claim Social Security, you must reach your full retirement age (FRA) before getting benefits if you want to receive your standard benefit. The standard benefit is the amount you're entitled to based on average wages over the course of your career.
If you're turning 66 in 2024, then your full retirement age is 66 and eight months. That's the case because your birth year would be 1958, and your birth year determines when you hit FRA. People born in 1958 have to wait until they're 66 years and eight months old before they can get their standard benefit.
That means if you're turning 66 at any point this year, you won't be able to get benefits without reducing them until eight months have passed from the time of your birthday. This may come as a surprise, since previous retirees have had an earlier FRA.
The reality is, FRA has been gradually moving later for anyone born after 1943, and it will continue to do so for another two years. Then, anyone born in 1960 or after will have a full retirement age of 67 and won't be able to claim before then without reducing their benefits.
Don't get hit with early retirement penalties because you don't know how the system works
The rules around full retirement age can be confusing, especially if you know people who have returned in recent years and been able to claim their full benefit earlier than you can. But it's really important not to make a mistake and claim earlier than you should.
Each month that you claim your Social Security benefits ahead of schedule can result in a reduction in your Social Security check. Benefits are reduced by 5/9 of 1% for the first 36 months you claim before FRA and by 5/12 of 1% for any prior month.
So if you were to assume that you could claim as soon as you turned 66 but your FRA was really 66 and eight months, you might accidentally claim your checks eight months early. This would result in around a 4.4% reduction in monthly benefits. If you were due to get $1,800 as your standard benefit, you'd lose $79.20 every month, or $950.40 a year, in Social Security income because of a simple mistake.
To avoid this error, make sure you know that your full retirement age is 66 years and eight months if you're turning 66 this year and don't get your first check until you've reached the right age -- unless you do so after making the fully informed strategic choice with the understanding that your benefits are going to be smaller because of it.
