It has been many years since age 65 was routinely full retirement age (FRA). Except for people born in 1937 or earlier, FRA is an older age, resulting in a reduced retirement amount for benefits started at age 65. The legislative change to FRA was included in the Social Security Amendments of 1983, signed into law by President Reagan.
Despite this change taking place years ago, I routinely receive questions from people who do not seem to be aware of it. Very recently, several questions arrived from a person reaching age 65 in March of 2015, when he planned to retire. He wanted to start his Social Security retirement at that time but was concerned about avoiding a reduced retirement amount.
As noted above, since he will be age 65 in 2015, starting his SSA retirement that March results in a reduced benefit because he will still be younger that his full retirement age (FRA) of 66. The way to avoid a reduced Social Security retirement benefit is by waiting to start until FRA.
Once at least age 62, you can start your SSA retirement with any month you chose. Any reduction or increase depends on the number of months that you are before or past your full retirement age (FRA). Reductions are permanent but any cost of living adjustments are received.
Information and calculators are at the SSA Retirement Planner. Use the Retirement Estimator to obtain your approximate full retirement age (FRA) amount based on your own work record.
In the Retirement Planner, use the “Find your retirement age” chart to find your own full retirement age (FRA). More than just providing a FRA, this chart also shows the month-by-month percentage of reduction from age 62 to FRA. Each full retirement age has slightly different reduction percentages because the number of months from age 62 to the FRA will be different from the other FRA’s.
Full retirement age is 66 for people born between1943-1954. For them, starting SSA retirement before age 66 means a reduced amount, with different reductions for each month. Below are two images from the FRA page for these years of birth. The first shows what the FRA is and the second is an example of the monthly reduction rates for FRA at age 66. Neither is a full image.
Using these charts to estimate the retirement amount for any month is easy. For example, use a birthdate of March 7, 1950, and an FRA amount of $1,500. Starting SSA retirement effective March 2016 at age 66 provides an unreduced $1,500 monthly amount. Using this, here are results of several 2015 retirement months.
Depending on expected 2015 earnings and the 2015 SSA retirement earnings limits, which are not yet known, this person might decide to start Social Security retirement effective with January 2015, even with an actual retirement date in March. That is 14 months early, providing a monthly benefit reduced to about 92.2 percent of the FRA amount, or about $1,383.
Benefits started effective March 2015, are 12 months early. Starting then results in a monthly retirement about 93.3 percent of the FRA, equal to about $1,399 per month, while benefits started with April are 11 months early and reduced to about 93.9 percent or $1,408. Start benefits when best for you, whether before, at or after FRA.
Also part of the Retirement Planner, the “Compute the effect of early or delayed retirement” calculator provides the same basic reduced benefit information while also including benefit amount increases information for retirement started when you are older than full retirement age. Early or delayed refers to before or after your full retirement age. This calculator uses the term “primary insurance amount” which means the same thing as your full retirement age (FRA) amount. As above, use the Retirement Estimator to estimate your personal FRA amount based on your own work record.