What is Full Retirement Age?

Why is it Important?

How is Full Retirement Age Changing in 2017?

Were you born after January 1, 1955? If so, you should be aware that the Social Security Full Retirement Age is increasing starting this year. This impacts your benefits – and not in a good way.

Full retirement age (FRA) is the age at which a worker first becomes entitled to full (unreduced) retirement benefits.

Workers can claim benefits early, once they reach age 62. But if you claim before your FRA, you receive permanently reduced benefits. On the other hand, if you wait until after your FRA to begin your claim, your benefits will be increased through what are called delayed retirement credits. This means that the longer you wait (up to age 70), the more you will eventually receive each month. The reduction (or increase) in benefits is permanent: it will continue for the remainder of your life.

To understand how this works, see my earlier blog post: Claiming Social Security Retirement Too Early can be a Big Mistake.

For many years the FRA was age 65. However, because people were living longer, Congress wrote gradual increases in the age into the law. For workers born between 1938 through 1943 the FRA increased in two-month increments for each successive birth year. For workers born between 1944 and 1954, the FRA held steady at age 66. But for people born in 1955 and after it increases again in two-month increments each year until it reaches age 67 (for workers born in 1960 or later).

This means that workers who turn 62 in 2022 or later will be subject to an FRA of 67. The chart below illustrates these changes.

The earliest age at which workers may start to receive reduced retirement benefits remains 62; however, benefit reductions at that age will be larger for workers whose FRA is higher. For example, workers born in 1954 (whose FRA is 66) receive a permanent 25 percent reduction in their monthly benefit amount if they claim benefits at age 62 rather than at the FRA. However, workers born in 1960 (whose FRA is 67) will receive a 30 percent benefit reduction if they claim benefits at 62.

In other words, an increase in you FRA reduces your lifetime benefits regardless of the age at which you initially claim benefits. The percentage of the reduction depends on the age at which you choose to claim benefits. To raise your monthly benefit you can delay claiming until a later age, but that means you will receive benefits for fewer years.

It’s quite possible that the FRA will be increased again for younger workers. One way Congress could improve the long term financial stability of Social Security would be to raise the retirement age to 68. The Congressional Budget Office estimates that a one-year increase in the FRA would shrink federal Social Security outlays by 7 percent by 2046 compared to what would occur under current law. Note that any such additional increase in the FRA would probably only be applied to younger workers, not those close to retirement.

Further Reading

Social Security Retirement Planner: Benefits By Year Of Birth

Social Security Retirement Planner: Delayed Retirement Credits