Social Security full retirement age 67 early claiming reduction, Digi Mart USA News: Turning 66 may feel like the finish line for Social Security, but that assumption could quietly shrink your checks for the rest of your life. The reduction can also affect annual raises and a spouse’s future income.
The monthly benefit you are eligible for depends on your earnings history and the age you choose to start receiving benefits. You can begin collecting Social Security as early as age 62, but to receive full monthly benefits without a reduction, you must wait until full retirement age, or FRA.
Social Security’s FRA was once 66, but for people born in 1960 or later it is 67. Someone turning 66 in 2027 who claims benefits then would be filing a year early and can expect a permanent reduction of about 6.7 percent.
That reduction is smaller than the roughly 30 percent permanent cut for claiming five years ahead of FRA at age 62. However, if Social Security will make up most of your retirement income, or you have no other income to fall back on, claiming even one year early could hurt you throughout retirement.
Early claiming also has less obvious effects. Each year, Social Security benefits receive a cost-of-living adjustment, or COLA, to keep pace with inflation, but a reduced benefit means smaller COLA increases in dollar terms.
If you are the higher earner in your household and die before your spouse, your spouse is typically eligible for survivor benefits equal to 100 percent of the monthly check you were receiving. Filing one year early reduces those survivor benefits as well, leaving your spouse with less income for the rest of their life.
Claiming early can be a sound choice when you deliberately need the money or want it for a specific goal. The problem arises when people claim a year early and lose 6.7 percent of their benefits for life simply because they did not realize they were filing too soon.
That is why knowing your FRA before you file is essential.
As of now, FRA is 67 for anyone born in 1960 or later, which makes it an easy number to remember. However, Congress could vote to change FRA in the future, particularly because Social Security faces a funding shortfall and raising FRA is one possible solution.
Staying informed about potential changes can help you avoid filing at the wrong time.
