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Social Security benefits can be a substantial source of income in retirement, and the more you know about how your benefit amount is calculated, the easier it will be to maximize your monthly payments.
There are many decisions that will impact the amount you receive each month, but one of the most important is the age you begin claiming. There’s one vital number, though, that the majority of adults can’t name: their full retirement age.
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What is your full retirement age?
Your full retirement age (FRA) is the age at which you’ll receive the full benefit amount you’re entitled to. If you were born in 1960 or later, your FRA is 67 years old. Those born before 1960 have an FRA of either 66 or 66 and a certain number of months, depending on the exact birth year.
If you didn’t know your FRA off the top of your head, you’re not alone: Only 16% of adults correctly named their FRA in a 2021 survey from the Nationwide Retirement Institute.
In addition, many survey participants guessed that their FRA is lower than it actually is. While everyone’s FRA will fall somewhere between age 66 and 67, the average guess was 61 years old. Even among baby boomers (the generation closest to retirement), the average estimate was 64 years old.
Why does your FRA matter?
Not knowing your FRA may not seem important, but it could have a major impact on your retirement strategy.
If you claim earlier than your FRA, you’ll receive reduced payments — up to 30% less than your full benefit amount. By waiting until after your FRA to file, you’ll earn extra each month on top of your full benefit amount.
When you’re uncertain about your FRA, it’s possible to mistakenly claim early or later. For example, if you believe your FRA is 64 when it’s really 67, you may think you’re receiving your full benefit amount when you’re actually getting reduced payments. Or if you claim at 67 believing your FRA is 64, you may expect to receive larger checks, when you’re actually only collecting your full benefit amount.
Finally, your benefit amount is generally locked in once you file (save for annual cost-of-living adjustments). If you mistakenly claim early, you may be stuck with those smaller payments for the rest of your life.
Maximizing your benefits
Once you know your FRA, you can decide whether you want to claim Social Security at that age, file earlier, or delay benefits.
There are advantages and disadvantages to each option, and there’s not necessarily a right or wrong answer as to what age you should claim. Just be sure you know the implications of filing early or delaying, as it will affect the size of your monthly checks.
Though it may not seem like it, your FRA can have a significant impact on your Social Security strategy. When you know this number and have a plan for what age you want to file for benefits, you can ensure you’re heading into retirement as prepared as possible.
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