Social Security: Whether You’re 62, 65, 67 or 70, Here’s Why Your Age Matters
Written by
Vance Cariaga
Edited by
Melanie Grafil
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Retirement is a numbers game in the United States, and those numbers make a big difference in terms of the Social Security benefits you ultimately receive.
For Social Security purposes, the most important numbers to remember are 62, 66, 67 and 70 — all of which are ages that can have an impact on your retirement benefits. Another age that used to be important, 65, has little significance anymore.
Let’s dig a little deeper into why your age matters for your Social Security benefits:
What Happens at 62?
Let’s begin with 62. That’s the age when you can first start claiming Social Security retirement benefits, though at a reduced monthly payment. Taking Social Security this early means as much as a 30% benefits reduction.
The next two ages — 66 and 67 — are when you reach full retirement age (FRA), depending on your birth year. The FRA is when you become eligible for unreduced Social Security retirement benefits. Age 70 is when you can get the maximum benefit.
Age 65 was the retirement age for decades before Congress overhauled Social Security in 1983, leading to a gradual rise in the FRA.
The Financial Difference of Full Retirement Age
In 2024, many people born in 1957 and 1958 will reach full retirement age. The FRA for those born in 1957 is 66 and six months. For those born in 1958, the FRA is 66 and eight months. Full retirement is 66 and 10 months if you were born in 1959. For all Americans born in 1960 or later, the FRA is 67 years old.
Age matters because they affect how much money you’ll get from Social Security once you begin collecting benefits. Collecting at age 62 means you will get the lowest possible benefit, and waiting to collect at age 70 guarantees the maximum possible benefit.
As previously reported by GOBankingRates, a recent study from Fidelity found that if you claim Social Security at age 62 rather than waiting until your full retirement age, you can expect a 30% average reduction in monthly benefits. Every year you delay claiming benefits past your FRA up to age 70, you get an 8% increase in your benefit. There is no advantage to waiting until past age 70 to collect.
Will Social Security Run Out of Money?
There has been debate about the program’s Old-Age and Survivors Insurance (OASI) Trust Fund potentially running out of money as early as 2032. However, the Social Security trustees’ May report suggests that there will be money well into 2035, but average benefits may be reduced to around 83% of full benefits.
Regardless of the actual year, when the OASI runs dry Social Security will have to be funded solely by payroll taxes, which will only cover about 75% to 80% of current benefits.
The trust fund’s impending insolvency has become a hot-button political issue, as lawmakers offer different theories on how best to deal with it. Some have even proposed raising the full retirement age to 70.
Recently, a proposed Republican Study Committee budget, which includes 170 Republican lawmakers, suggests “modest adjustments to the retirement age,” though it does not specify what age they might recommend.
Raising the full retirement age pushes more Americans to wait a couple of years to claim Social Security benefits, saving money over the short term. Opponents of such a move say it will reduce benefits for seniors still claiming Social Security early for financial reasons.
Can Raising Payroll Taxes Help?
Another proposal to bolster Social Security is to raise the payroll tax on the program. The current tax is 6.2% of wages, paid by both employees and employers. Others want to raise the maximum earnings subject to Social Security payroll taxes. Currently, any wages above $168,600 are not taxed. Proposed legislation co-sponsored by U.S. Rep. Peter DeFazio (D-Ore.) and U.S. Sen. Bernie Sanders (I-Vt.) would hike that to $250,000.
While all these numbers are being juggled, something needs to be done to prop up Social Security before the trust fund is depleted.
Alicia Munnell, director of the Center for Retirement Research at Boston College, says the two main choices are to cut benefits or raise revenues through higher taxes.
“People say the following: We can do it either through benefit cuts, tax increases or raising the full retirement age,” Munnell told CNN. “There’s no third option — there are only benefit cuts or tax increases. Raising the full retirement age is a mechanism for cutting benefits.”
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