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Your full retirement age (FRA) is when you’re eligible to receive your primary insurance amount.
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Claiming standard or spousal benefits before reaching your FRA will permanently reduce the monthly amount you receive.
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Earning over a certain amount while claiming benefits before your FRA could reduce your monthly benefit.
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The $23,760 Social Security bonus most retirees completely overlook ›
Social Security has been one of America’s most essential social programs for quite some time. After years of paying into the Social Security system, it’s a well-earned benefit. And for many Americans, it’s most or all of their retirement income.
Despite its importance, Social Security has many moving parts, which can be challenging to keep up with, even for people well-versed in the program. That’s why it’s a good idea to block out the fluff and focus on the most important parts of the program.
If there’s one piece of advice I’d offer retirees or those approaching retirement, it would be to be aware of how much Social Security revolves around your full retirement age (FRA).
Your FRA is when you’re eligible to receive your primary insurance amount (PIA), which you can think of as your baseline benefit amount and the starting point Social Security uses to calculate your benefits. Here are FRAs based on birth years:
Starting at your PIA, your monthly benefits are permanently affected based on when you claim relative to your FRA. Claiming before your FRA reduces your monthly benefit. If you’re within 36 months of your FRA, benefits are reduced by 5/9 of 1% each month you claim early. If you claim benefits more than 36 months before your FRA, benefits are further reduced by 5/12 of 1% monthly.
For someone whose FRA is 67, this means claiming benefits at 64 would reduce them by 20% and claiming at 62 (the earliest age you can claim) would reduce them by 30%. Those are significant deductions that warrant careful consideration of whether it’s worth claiming early with the reduced benefit amount.
On the opposite end, delaying benefits past your FRA increases them by 2/3 of 1% monthly, or 8% annually, until you turn 70. After 70, benefits are no longer increased by delaying them.
Social Security spousal benefits allow someone to receive up to 50% of their partner’s PIA. However, similar to standard benefits, claiming spousal benefits before your FRA will also permanently reduce them. The only difference is by how much.
