According to data from 2023, the United States has a population of 59 million adults who are over the age of 65, the standard and conventional retirement age most people think of when envisioning what age you are set to retire at. In the retiree population, many of these adults claim Social Security benefits from the Social Security Administration (SSA). However, while 65 is considered the standard age at which you retire, many individuals will be surprised to know that the SSA uses a different retirement age.
SSA supports nearly 70 million individuals
While the bulk of Social Security beneficiaries are made up of retirees, SSA also supports disabled individuals, individuals with little to no income or resources, and survivors. This year, approximately 69 million individuals claim Social Security benefits. Of these beneficiaries, many rely on Social Security as their primary source of income in their retirement. A major challenge presented by this, however, is that the average Social Security payment is just under $2,000 per month, which for many is not enough to live a comfortable retirement.
An additional problem beneficiaries face is that nearly half of these beneficiaries owe federal income tax on their benefits. Many of criticized this, as the taxing of Social Security benefits was only intended for top earners, however, the income limits and thresholds which determine if you pay federal tax on your benefits has not changed in over forty years, meaning what was once considered a high payment half a century ago is now no longer the case. This is also amidst rising cost-of-living prices.
“According to the U.S. Bureau of Labor Statistics, so far this year, food prices have increased 2.5%, rent and housing costs have climbed 4.4%, and health care services have increased by nearly 3%,” describes Kelley Taylor in Kiplinger.
New retirement age for beneficiaries
When it comes to claiming your retirement income, the minimum age you can do so is at 62. However, it is a known fact that the SSA increases your benefits if you delay claiming for as long as possible. By increasing the benefits for retirees, the SSA encourages individuals to wait until they reach the Full Retirement Age (FRA). However, the FRA is not the standard age of 65 which everyone associates with retirement.
The Social Security policy on retirement age, you are only entitled to receive the maximum benefits from Social Security at 70 years old. However, the FRA is age 67. If you further delay past age 67, your benefits will keep increasing by 8% until you reach a cap at age 70, where no further benefit is given to you past this age. If you claim at 67, you receive no reduced benefit compared to if you claim between 62 and 67.
Different FRA depending on your birth year
To make matters slightly more confusing and painful for beneficiaries, currently, FRA ages do differ depending on when you were born. If you were born in 1960 or later, the current FRA age of 67 applies to you. However, because the FRA age of 67 was only implemented in 1983, the new FRA age was slowly implemented, meaning different birth years have different FRAs. When the SSA was first established, the FRA was 65, but it was increased to address funding concerns.
If you were born between 1943 and 1954, your FRA is 66 years old. Those born in 1955 have an FRA of 66 years and two months. If you were born in 1956, your FRA is 66 years and four months. If you were born in 1957, your FRA is 66 years and six months. If you were born in 1958, your FRA is 66 years and eight months. Finally, those born in 1959 have an FRA of 66 years and 10 months. If you can delay your benefits for as long as possible until 70 years old, you can reap the highest reward.
