Social Security Full Retirement Age Is Rising — 4 Things To Do Now If You Plan To Retire in 2026
Written by
Angela Mae
Edited by
Amen Oyiboke
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The full retirement age (FRA) — that is, the age when you can collect your full monthly Social Security benefit — used to be 65 for most people. Now, if you were born in 1960 or later, the FRA is 67.
This isn’t exactly a new change, but if you plan to retire next year and fall a little short of the full retirement age, your Social Security benefit will likely be smaller than anticipated. Even retiring just one year early — at the age of 66 — would decrease your benefit amount by 6.7%. Retire at 65, and your benefit drops by 13.3%.
So, what can you do if you’re planning to retire next year to set yourself up for success? Here are a few options.
Take a Two-Pronged Approach
Depending on when in 2026 you plan to retire, you have anywhere from about six months to 18 months to figure out how you’ll handle a potentially reduced benefit (assuming you’re retiring before the full retirement age).
If you don’t want to wait, Ryan Monette, CFP and member-owner at Savant Wealth Management, suggested doing two things right now:
- Building your cash reserves now
- Focus on growing your investment portfolio
How you go about doing this is up to you. For example, you could take on a side gig to increase cash flow. According to Forbes, the average side hustle brings in about $12,689 annually — or $1,057 a month. Depending on your retirement timeline, that’s between $6,342 and $19,026 of extra money potentially coming in.
Of course, you could also pad your investments using this extra cash. It might not fully cover what you need, but it can help if you’re planning to wait to collect Social Security until the FRA.
Discover Next: Social Security Full Retirement Age Went Up This Month — Why It May Continue To Rise
Delay Your Benefits
The further away you are from full retirement age, the smaller your overall benefit will be. But if you’re dead-set on retiring — and you’re not 67 — consider delaying your benefits.
“Delaying Social Security could have a significant long-term positive impact on the total Social Security benefits received over a lifetime,” said Monette. “This is because the monthly benefit will be larger, and the larger monthly benefit will receive cost-of-living adjustments, which means more dollars for the recipient.”
If you can, find a way to live on your cash reserves and investments until you reach the full retirement age. After that, you can start collecting Social Security without the reduction.
Suspend Your Benefits at Times
Did you know that you can voluntarily suspend your Social Security benefits? You’ll need to have reached the full retirement age, but still be under 70 years old. If you meet these criteria, you can earn “delayed retirement credits” for the months you’ve suspended yours.
“Voluntarily suspending Social Security will create a larger benefit in the future because delayed benefits earn 2/3 of 1% per month, or an 8% increase for every 12 months delayed from FRA to age 70,” said Monette.
You’ll have to start collecting once you turn 70.
Review Your Wages and Business Income
If you’re a business owner with an S Corp, now’s a good time to look into how you’ve structured yours. In particular, try to find a balance between the business income and the wages you earn.
“Wages pay FICA taxes, and the amount of FICA taxes impacts your future Social Security retirement benefits,” said Monette. “The greater the wages you earn up to a point translates into greater Social Security received in the future.”
Speak with your accountant — if you’ve got one — about your options.
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