Starting this year, millions of Americans planning to retire will face a significant change in their financial planning: the full Social Security retirement age (FRA) has officially increased to 67. This marks the final step of a gradual increase that began back in the 1980s.
The full retirement age is the age at which Social Security beneficiaries can start receiving 100% of their monthly payments.
Previously, this age was 65, but with people living longer, Congress decided to adjust the age to ensure the system remains sustainable for future generations.
Why the Change to 67?
The shift to 67 is due to several important factors:
- Increased Life Expectancy: When Social Security was created in 1935, life expectancy was only 61 years. Today, life expectancy is much higher, with people living to an average age of 80 years. As a result, people are drawing benefits for a much longer period than originally planned.
- Financial Pressure on Social Security: Social Security is funded by taxes collected from current workers. With fewer people working relative to the number of retirees, there is increasing financial pressure on the system. By raising the full retirement age, the system can better balance the costs and ensure its continued viability.
How to Determine Your Social Security Retirement Age
You can easily find out your full retirement age by using an online tool provided by the Social Security Administration (SSA).
This tool allows you to check your exact FRA based on your year of birth, as well as the estimated monthly benefits you would receive at different retirement ages. You can access this tool at: ssa.gov/retirement/ageincrease.html
What Happens If You Retire Earlier Than 67?
If you choose to retire before age 67, your monthly payments will be reduced. For example:
- If you retire at age 65, you will only receive about 86.7% of the monthly benefit you would have received if you waited until age 67.
The earlier you retire, the more your monthly payment will decrease, so it’s important to consider your financial needs and health before making that decision.
What If You Delay Retirement?
On the other hand, if you decide to delay your retirement beyond age 67, your monthly benefits will increase by 8% for each additional year you delay up to age 70. This can significantly boost your monthly payments if you are in good health and can afford to delay drawing benefits.
The increase in the full Social Security retirement age to 67 is a major shift in retirement planning for millions of Americans.
While this change is part of an ongoing effort to ensure the financial health of the Social Security program, it also offers individuals more flexibility in deciding when to retire.
Whether you retire at 67 or choose to delay, it’s crucial to understand how this adjustment will impact your benefits and plan accordingly for a secure financial future.
FAQs
Why has the Social Security retirement age been increased to 67?
The Social Security retirement age has been raised to 67 due to increased life expectancy. When Social Security was established in 1935, life expectancy was 61. Today, life expectancy is around 80 years, meaning people are drawing benefits for a longer period. This change also helps ensure the financial sustainability of the Social Security program.
How do I know my full retirement age for Social Security?
To find your full retirement age (FRA), you can use the online tool provided by the Social Security Administration. The tool allows you to check your FRA based on your birth year and provides estimates for your monthly benefits at different retirement ages. You can access the tool at ssa.gov/retirement/ageincrease.html.
What happens if I retire before 67?
If you retire before your full retirement age of 67, your monthly Social Security benefits will be reduced. For example, if you retire at age 65, you will receive approximately 86.7% of the benefit amount you would get at age 67. The earlier you retire, the more your benefit will be reduced.
What happens if I delay my retirement beyond 67?
If you choose to delay your Social Security retirement beyond age 67, your benefits will increase by 8% for each additional year you wait, up to age 70. This allows you to receive a higher monthly payment for the rest of your life.
