Your full retirement age (FRA) is the age at which you are eligible to receive 100% of your Social Security retirement benefit. In this post, we will review the FRA and how you can determine your retirement age based on the year you were born.
We will then review how much you will lose in benefits if you start collecting benefits early, and offer 5 reasons why it makes sense for some people to collect benefits early.
Finally, we will review how Social Security benefits are taxed and help you figure out if your benefits will be taxed.
This post on Social Security Retirement Age will cover:
- What is the Full Social Security Retirement Age?
- Best Time to Start Collecting Social Security?
- 5 Reasons to Claim Social Security Early
- Are Social Security Benefits Taxed?
What is the Full Social Security Retirement Age?
Your full retirement age (FRA) is the age at which you are eligible to receive 100% of your Social Security retirement benefit.
The full retirement age used to be 65 for those born in 1937 or earlier.
However, in 1983, Congress passed a law to increase the retirement age to 67 over a 22-year period (for those reaching age 62 between 2000 and 2022).
The FRA will reach 67 for workers born in 1960 or later – who become eligible for retirement benefits at age 62 in 2022 or later.
The table below shows the full retirement age based on the year you were born.
| Year of birth | Age |
|---|---|
| 1937 and prior | 65 |
| 1938 | 65 and 2 months |
| 1939 | 65 and 4 months |
| 1940 | 65 and 6 months |
| 1941 | 65 and 8 months |
| 1942 | 65 and 10 months |
| 1943-54 | 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 |
When you start Collecting Social Security Matters
Today, you can claim your retirement benefit as early as age 62, ahead of your full retirement age.
However, assuming your full retirement age is 67, if you start receiving Social Security benefits at age 62, you will receive 30% less in benefits – compared with what you will receive if you wait until age 67.
On the other hand, if you wait until your full retirement age, you will receive 100% of the benefits you are entitled to.
Collecting Social Security early will cost you
As stated above, collecting Social Security before your full retirement age reduces the amount of the monthly benefits you receive.
However, how much your benefit will be reduced depends on the precise age when you start claiming Social Security early.
The example below illustrates this further. In this example, we are assuming that the full retirement age for this person is 67 – which is the FRA for anyone born in 1960 or later.
If your full retirement age is 67, your Social Security benefit is reduced by:
- About 30 percent if you start collecting at 62.
- 25 percent if you start collecting at 63.
- 20 percent if you start collecting at 64.
- 13.3 percent if you start collecting at 65.
- and about 6.7 percent if you start collecting at 66.
The Best Time to Start Collecting Social Security?
If you talk to financial planners, they will tell you to wait until age 70 to start collecting Social Security benefits.
However, few Americans take that advice. The most popular age to take Social Security is age 62.
According to the chart below from USA Today, 34% of Americans claim Social Security at age 62.
Meanwhile, only 3.7% start claiming benefits at age 70. The table below provides a breakdown of when people claim social security by age.
Age when people start collecting Social Security
| Age | Percentage |
| 62 | 34.3% |
| 63 | 6.3% |
| 64 | 6.4% |
| 65 | 10.3% |
| 66 | 18.1% |
| 67-69 | 3.9% |
| 70 | 3.7% |
Should You Start Collecting Social Security Early?
The decision to collect Social Security benefits early is a personal one. You have to consider many factors, including your financial situation and life expectancy, among others.
However, if you make the decision to start collecting Social Security early, even at age 62%, there are several factors to consider. Here are five of them:
5 Reasons to Claim Social Security Early
There are many reasons that go into the decision to claim Social Security benefits early. Here are the top factors:
You’re Afraid Social Security Will Run out of Money
Social Security is one of those benefits that’s supposed to be around forever.
However, according to this report by ABC News, the Social Security program is running out of money with benefits on track to be reduced by around 2035 unless Congress steps in.
Options to fix the program could include increasing the payroll tax, raising the retirement age or modifying the formula that determines how people receive their benefits.
Therefore, if the thought of losing out on Social Security benefits is keeping you up at night, it may be better to start claiming early or at full retirement age rather than holding off until age 70.
The Promise of Early retirement
Many seniors start collecting Social Security early because of the promise and excitement of early retirement.
For some, early retirement is a welcome break from decades of work, especially if the work is not an enjoyable one or it’s physically and mentally demanding.
In addition, seniors that have enough money saved can choose to start collecting Social Security early and avoid tapping into their own savings too much.
Health concerns
Perhaps, one of the biggest factors that cause many seniors to start collecting Social Security benefits early is health considerations.
Here is a table showing the life expectancy in America by race.
The life expectancy for the U.S. for all races was 78.9 years. Based on race, life expectancies in 2014 were as follows:
Life Expectancy in America By Race (2014)
| Race | Life Expectancy |
| Native Americans | 75.06 years |
| African Americans | 75.54 years |
| White Americans | 79.12 years |
| Hispanic Americans | 82.89 years |
| Asian Americans | 86.67 years |
Retirement can last 20 or 30 years if you’re a healthy senior. However, many people also develop illnesses as they age.
If you’re in poor health and you expect to have a short life expectancy, it might make more sense to start taking the smaller monthly benefit as soon as you can.
That may help you live an optimal life. In addition, your Social Security benefits may help you afford better medical care.
You Can’t afford to wait
In addition, you may be in a position where you cannot afford to wait until full retirement age or until age 70 to start claiming Social Security benefits.
This may be due to involuntarily reasons.
Perhaps, you are being forced out of your job for health reasons or job loss.
Spousal or Child benefit reasons
If your spouse didn’t work or earned much less than you did, a spousal benefit based on your work record could provide them with retirement income.
Also, retirees with children under 18, age 18 or 19 that are still in high school, or are disabled, may qualify for children’s benefits.
However, for both of these benefits to kick in, the primary worker has to claim benefits before spousal or children’s benefits can be paid.
Therefore, if you are in a situation where your qualifying spouse or child needs the benefits, that may force you to start claiming your benefits earlier than perhaps planned.
Are Social Security Benefits Taxed?
Social Security benefits become taxable if the sum of your adjusted gross income, nontaxable interest and half of your Social Security benefit exceeds a certain threshold.
How much in taxes you pay also depends on whether you are filing your tax returns as an individual or a married couple.
Regardless of how much Social Security benefits you receive, the first 15% of your benefits are not taxed.
The key factor in how much taxes you will pay on your Social Security benefits have to do with how much you have in Combined Income.
The Social Security Administration defines combined income using this formula:
Your adjusted gross income
+ Nontaxable interest (for example, municipal bond interest)
+ ½ of your Social Security benefits
= Your combined income
If you file your federal tax return as an individual and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
However, if your combined income is more than $34,000, you may have to pay tax on up to 85% of your benefits.
If you’re married filing a joint return and your combined income is $32,000 to $44,000, you may have to pay income tax on up to 50% of your benefits.
If your combined income is more than $44,000, you may have to pay tax on up to 85% of your benefits.
Note that the income cutoffs listed above for Social Security taxes are not adjusted for inflation each year, unlike the maximum benefits amount and COLA increases.
As a result, more recipients will need to pay tax on their Social Security benefits over time.
Retirees Paying Taxes on Social Security Benefits
A large majority of Social Security benefit recipients do not pay taxes on their benefits. That is because, for many retirees, their Social Security check is their main source of income.
The average monthly Social Security payment to retired workers was $1,411 in 2018 or $16,932 for the year.
That is considerably lower than the taxable threshold for an individual, which is $25,000
However, about 40 percent of Social Security beneficiaries still have to pay federal income tax on part of their benefit.
State Taxes on Social Security
In addition to paying federal taxes, 13 states also tax Social Security in some form.
If you live in Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, North Dakota, Vermont, Utah or West Virginia, contact your state tax agency for details on how benefits are taxed.
West Virginia is phasing out state taxation of Social Security and as of the 2021 tax year will no longer tax benefits for most residents.
Social Security Retirement Age Summary
We hope this post on Social Security Retirement Age was helpful.
If you have further questions about Social Security Benefits, please let us know in the comments section below.
Be sure to check out our other articles on Social Security including How Social Security Benefits are Calculated, Social Security COLA Increase, and Maximum Social Security Benefits Guide and Social Security Questions and Answers.
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