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Full Retirement Age: What It Is And Why It's Important

Full Retirement Age: What It Is And Why It's Important

June 22, 2021

Social Security plays a monumental role in your retirement strategy. Given that the majority of retirees claim Social Security is a major source of their income, the age at which you claim Social Security benefits can greatly affect your financial future. Many pre-retirees may be unaware that the amount of SS benefits you’ll receive depends on the age at which you file. Here's a brief synopsis of what full retirement age is and the role it plays in maximizing your Social Security benefits.

The Definition of Full Retirement Age

Full retirement age (FRA) is the age when you are entitled to 100% of your Social Security benefits. Your FRA is based on average life expectancy and your birth year. Your full retirement age depends on when you were born. If you were born between 1943 and 1954, your full retirement age was 66. If you were born in 1955, it is 66 and 2 months.

For those born between 1956 and 1959, it gradually increases, and for those born in 1960 or later, it is 67.The Social Security Administration has a great chart (shown below) that shows full retirement age based on the year you were born. 

To find out how much your benefit will be reduced if you begin receiving benefits from age 62 up to your full retirement age, use the chart below and select your year of birth. This example is based on an estimated monthly benefit of $1000 at full retirement age.To calculate your FRA, you can use the Social Security Administration's retirement age calculator. 

Chart courtesy of ssa.gov

Common Misconceptions About Full Retirement Age

One common mistake we see clients make is this: they think that their benefits will increase once they reach full retirement age. When they claim at 62, they think they will get automatically-adjusted increased Social Security payments when they reach full retirement age. It's a mistake to think that your benefits will increase. Once you claim Social Security, your benefits will not change. As soon as you claim at 62, you have locked in your permanent reductions. 

The Role of Full Retirement Age In Maximizing Benefits

Monthly payments differ substantially depending on when you start receiving benefits. You can start claiming benefits as early as 62, which may make sense for some people. After all, SS benefits are like a free paycheck to many recipients. The thing to keep in mind is that claiming at age 62 means you will receive the lowest amount of SS benefits available. The sooner you start receiving benefits, the smaller the check. Overall, there are advantages to waiting until full retirement age or later to claim your benefits.

How is Your Social Security Calculated?

The Social Security Administration (SSA) calculates your benefits based on your lifetime earnings. More specifically, the SSA calculates your Social Security benefits by indexing your average monthly earnings during the 35 years you earned the most. The administration generates your basic benefit, or "primary insurance amount," which is what you will receive at your full retirement age. If you're not retired and haven't set up a Social Security account, you can go to www.socialsecurity.gov/estimator to learn more about your projected benefits. 

The Tipping Point

From the Social Security Administration’s point of view, it’s simple: if a person lives to the average life expectancy, the person will eventually receive roughly the same amount in lifetime benefits, no matter when they choose to start receiving them. In actual practice, it’s not quite that straightforward, but the principle holds.

The key phrase is “if the person lives to average life expectancy.” If a person exceeds the average life expectancy and has opted to wait to receive benefits, they will start to accumulate more from Social Security. We have included the chart below with a hypothetical scenario to illustrate how the SSA determines your benefits.

Tipping Point

The chart shows how Social Security benefits accumulate for individuals who started to receive at ages 62, 66, and 70. The person who started to receive benefits at age 62 would accumulate $652,320 by the age of 85. Conversely, the person who started to receive benefits at age 70 would accumulate $727,680 by the age of 85. The example assumes the maximum retirement benefit of $3,011 at age 66. It does not assume COLA.

Source: Social Security Administration, 2020

How You Can Maximize Your Benefits

Claiming benefits before full retirement age will lower your monthly payments; the earlier you file the greater the reduction in benefits. Remember, you can start receiving your Social Security retirement benefits as early as age 62, but each month you delay past your full retirement age you’ll receive a bonus. Retirement benefits are increased by a certain percentage for each month you delay starting your benefits beyond FRA. 

Claiming benefits prior to your full retirement age will reduce your benefit, but claiming after your full retirement age will increase them by 8% annually with the maximum benefit occurring at age 70. 

While there is no "best age" to retire, you should make an informed decision about when to apply for benefits based on your situation. There is no single right answer to the question of when to start benefits. Many base their decision on family considerations, economic circumstances, and personal preferences. If you need help with your plan, get started today!


1. Aarp, March 2021

2. Social Security Administration, https://www.ssa.gov/benefits/retirement/planner/agereduction.html

3. Fidelity, February 2021