Social Security: Whether You’re 62, 65, 67 or 70, Here’s Why Your Age Matters

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Retirement is a numbers game in the United States, and those numbers can 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 begin with 62. That’s the age when you can first start claiming Social Security retirement benefits, though at a reduced monthly payment. 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.

Are You Retirement Ready?

In 2023, many people born in 1956 and 1957 will reach full retirement age. The FRA for those born in 1956 is 66 and four months, according to the SSA. For those born in 1957, the FRA is 66 and six months. Full retirement ages increase in two-month increments if you were born in 1958 and 1959. For all Americans born in 1960 or later, the FRA is 67 years old.

One reason these ages matter is that they impact 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 highest 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. For 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.

Another important number regarding Social Security is 2032. That could be the year the program’s Old-Age and Survivors Insurance (OASI) Trust Fund runs out of money. Other estimates put the year at 2034 or 2035. 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.

Are You Retirement Ready?

The trust fund’s impending insolvency has become a hot-button political issue in 2023, as lawmakers offer different theories on how best to deal with it. Some have even proposed raising the full retirement age to 70.

Two major players who have recently suggested the FRA be raised are 2024 Republican presidential candidate Nikki Haley and U.S. Rep. Nancy Mace (R-S.C.), CNN reported. However, neither has said what the new FRA should be.

The idea behind raising the full retirement age is that it will push more Americans to wait an extra couple of years to start claiming Social Security benefits, which could save money over the short term. Opponents of such a move say it will lead to reduced benefits for seniors who still have to claim Social Security early for financial reasons.

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 $160,200 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 around, one thing almost everyone agrees on is that 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.

Are You Retirement Ready?

“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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