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As you plan for retirement, one of the most important considerations is the specific age you’ll want to target for your retirement date. There’s no one-size-fits-all approach to retirement – everyone has different goals, health care needs, finances, and interests.
How to Calculate Your Full Retirement Age
Your full retirement age is determined by the year you were born. The breakdown of full retirement age by year of birth is shown below:
| Year of Birth | Full Retirement Age |
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
The ideal retirement age varies from person to person. Part of your decision may include exploring how much your Social Security retirement benefits will factor into your retirement income and how early or late you’ll want to begin receiving those benefits. For a full understanding of how your full Social Security benefit will contribute to your retirement income, it’s important to think about whether you’ll opt for early retirement benefits, your full benefit, or delayed retirement benefits.
Understanding how the Social Security Administration calculates your full retirement age is a major step toward determining the age that makes the most sense for you to begin receiving your full benefit amount. While Social Security retirement benefits rarely compose the bulk of American workers’ retirement income, these benefits provide a valuable income supplement to up to 96% of retirees in America, so they’re nothing to take lightly.
How is Social Security Calculated?
The Social Security benefit is calculated by using an adjusted average of an employee’s 35 highest-earning years of workforce participation. The retirement income you receive will vary, depending on what age you are when you begin to receive those retirement benefits. Choosing when to apply for and start receiving your benefits is a personal choice. If you have all the right information, you can make the decision that provides the most appropriate benefit for you.
What Is Full Retirement Age?
Full retirement age is when you can receive 100% of the Social Security benefits you’ve earned throughout a lifetime of being part of the American labor force. You may also hear this referred to as “normal retirement age.” Your specific full retirement age depends largely on the year you were born.
The Social Security Administration provides the chart you see above to help you calculate what to expect in terms of your full retirement age.
Important Note
If you were born in January, you should go by the previous year rather than your birth year.
As you plan for your retirement, you should understand that if you choose to retire early and begin receiving your Social Security retirement benefits before you reach your normal, or full, retirement age, that choice will lead to a monthly benefit reduction. Waiting until later, on the other hand, will increase your monthly benefit amount.
If you’re interested in early retirement, you can begin to receive Social Security retirement benefits as early as age 62. However, you will receive a reduced benefit amount – perhaps as much as 30% lower than your full Social Security income. This helps compensate for the fact that you’re receiving benefits earlier than planned and likely will continue to receive them longer than if you began at full retirement age, simply based on estimates of life expectancy.
If you retire early, your benefits are reduced 5/9 of 1% for every month before your full retirement age, up to 36 months. But if the number of months is greater than 36, then your benefit is further reduced 5/12 of 1% per month.
Here’s an example. If your full Social Security retirement age is 66 and you retire at age 66, you will receive your full, maximum benefit – also called your primary insurance amount. So, if your full monthly benefit is $2,000, you’ll receive a $2,000 check every month. But if you choose to retire early at age 62, you won’t receive that total benefit of $2,000 every month. Instead, your early benefit will be reduced by about 25%, which means you’ll receive a $1,500 check every month.
Delayed Retirement
You can also increase your payments by delaying your retirement. By delaying benefits until age 70, you can guarantee that you get the largest possible monthly Social Security income. In fact, delaying benefits until age 70 can mean up to a 32% higher payout than if you begin receiving benefits at full retirement age. Using the example above, your $2,000 monthly benefit would rise to $2,640 per month. There’s no benefit to waiting until beyond age 70 for a retiree to begin collecting benefits. If you have other sources of retirement income, waiting until after full retirement age, or even all the way to age 70, could be a feasible option. But if you need your Social Security retirement benefits earlier to support yourself, then you should go ahead and begin collecting them.
How do you know whether you can afford to wait? First, you can analyze the numbers. The SSA offers a few different retirement benefit calculators that you might find helpful. They can help you factor in everything from your projected retirement age to your life expectancy and estimated benefits depending on your work history. You can also consider working with a qualified financial professional to perform a break-even analysis that will help you understand what your entire retirement income picture will look like under various scenarios.
Why Did the Retirement Age Change?
The Social Security Administration has gradually increased the full Social Security retirement age as life expectancy increases and older workers spend longer in the workforce. Life expectancy in the U.S. has risen from age 63 in 1940 to more than 77 today, which means that American retirees are collecting Social Security benefits for much longer than in years past. In 1990, the SSA predicted that an average 21-year-old had a 72% chance of reaching full retirement age. By 2009, the SSA reported that the same figure had risen to 79% chance by 2009.
Changes to the SSA’s full retirement age started as far back as 1983, when Congress increased the full retirement age from 65 to 66, before incrementally increasing it to the current full retirement age of 67 for everyone born after 1960.
Increasing full retirement age is one way to increase Social Security resources and ensure that the Social Security Administration remains financially healthy and able to provide benefits for future generations. As life expectancy for older Americans has improved dramatically and continues to do so, raising the retirement age helps make the most of the Social Security taxes we all pay throughout our working lives. Given the continued rise of life expectancy across the United States, it continues to be feasible that the SSA may keep modifying full retirement age to keep up with the changes.
Do I Have to Retire at Full Retirement Age?
No, the decision to retire is up to you. The Social Security Administration doesn’t dictate when you need to retire. It simply controls how much your total benefit income will be at the age you choose to begin taking those benefits. Before you make a final decision about the right time and age for you to retire, just make sure you fully understand how your retirement benefits will adjust depending on your age at retirement. The earlier you retire, the smaller your monthly Social Security benefit will be. You can also collect Social Security retirement benefits even if you continue working after retirement.
To determine your Social Security retirement benefit amount, the Social Security Administration uses data from your lifetime earnings. Those earnings are then adjusted to account for changes in average wages over the time range since your earnings began. After calculating your average monthly adjusted earnings for the 35 highest-income years of your working life, the SSA applies a formula to those earnings to calculate your monthly maximum benefit – which you are eligible for as soon as you reach full retirement age.
You also must have accrued 40 Social Security retirement credits, which were earned every year of your working life, based on the Social Security taxes you paid. Credits generally accrue at a rate of four per year, meaning you need to have worked at least 10 years to be eligible for Social Security benefits. Make note that this doesn’t mean you must have worked 10 consecutive years, only that the total of your work experience be at least 10 years.
Always Apply for Medicare at 65
No matter when you choose to begin receiving your Social Security retirement benefits, you also have another important consideration: Medicare. If you’re already receiving Social Security retirement benefits when you turn 65, you’ll automatically be enrolled in Medicare. But if you’re waiting to take your Social Security retirement benefits, make sure to apply for your Medicare benefits within three months of your 65th birthday – waiting to activate those benefits may mean that they’ll cost you significantly more later. This includes both Medicare medical insurance (Part B) and prescription drug coverage (Part D).
SSA Full Retirement Age
Your full retirement age generally indicates the appropriate time for you to begin receiving Social Security retirement benefits – benefits you’ve earned over your working life by accruing Social Security retirement credits. Keep in mind that the decision to retire is ultimately up to you. Just make sure that as you plan for your retirement years, you factor in the most advantageous time for you to apply to receive your Social Security retirement benefits – whether early, right at full, or normal, retirement age, or even later in life.
The final monthly benefit you receive will depend on the choices you make, so it’s wise to give it some thought well ahead of time. With the information presented here, you’re well on your way to making the smartest retirement decisions that can lead to a comfortable and fulfilling retirement.
