The increase in the age Americans may receive full Retirement Social Security Benefits begins the retirement age clock. From now Through 2025, every individual born between 1960 or later will have a full retirement age of 67. After this point, there will be no increases to full retirement age. More waiting time to receive full benefits means retirement benefit planning will have to be more balooned in years for no age increases.
Social Security Data Snapshot
| Year of Birth | Full Retirement Age |
|---|---|
| 1959 | 66 yrs, 10 months |
| 1960+ | 67 years |
The Shift to Age 67
The balance between the age benefits are claimed, life expectancy, and the remaining time for benefits to be claimed is what concludes the incremental changes to age retirement. The Social Security Act of 1983 clearly stated benefits for those born between 1938-1960 would be 65 and faced no additional waiting time to claim benefits. The 1992 Social Security amendments came and completed the 1983 amendments stating those born between 1938 and 1960 would have a retirement age of 67. This will directly impact the benefits received in 2025.
Claiming Earlier or Waiting Longer
The age benefit claims and the life expectancy remaining do claim benefits earlier and face a 30% reduction in benefits. Claiming benefits can occur any time after age 62. If a person is eligible to receive $1,000 monthly benefits, that amount will drop to $700 if this individual opts to retire at 62, which is five years early. This decrease will be permanent and will represent about 30% of their total monthly entitlement. On the other hand, a retiree will gain up to 24% of their full retirement age benefit should they decide to retire after age 70. For those who can afford to, this is the most financially beneficial route to take
The Financial Pressures Behind Policy Debates
Policies aimed at raising the retirement age are motivated by the predicted ‘silver tsunami’ and latent Social Security solvency issues. With a smaller number of workers paying into the system, the ability to cash out Social Security benefits will appeal to a larger segment of the population. If no system reforms are made, Social Security projected benefits will see a drop. Likely reforms, which will improve the system’s financial standing, include raising the retirement age and increasing Social Security tax for high earners. [6][1][3].
The Impact On Americas Retirement Plans
America’s government and corporate systems determine retirement age and switch retirement policies to 67. Millions must either restructure their well earned retirement plans, work longer, or lose benefits that will almost be useless if they retire early. Retirement financial planning usually focuses on saving more for retirement, waiting to claim Social Security, and finding other income to cover for a possible shortfall.
Review Your Choices
One of the clarifications Social Security Administration made surrounding retirement rules was to change the “early eligibility age” to “minimum monthly benefit age” to stress the impacts of claiming benefits early. These clarifications around Social Security are meant to help individuals understand the correct claiming age and the lifelong consequences of such a decision.
FAQs
- Can I claim Social Security benefits at age 62?
Yes, you can claim benefits, but your monthly benefit will be reduced for life. This reduction can be as much as 30% for the rest of your life compared to the full benefit you would get at age 67.
- What is the new full retirement age for Social Security?
For people born in 1960 and later, the FRA will be 67 in 2025.
- Will my monthly payment be higher if I continue to delay benefits past 67?
Yes. If you delay claiming benefits until age 70, your monthly benefit at 67 would increase by 24%.
