What Is Full Retirement Age and Why Is It Important?

You probably know that Social Security benefits are available for older people who leave the workforce. You might even know that those benefits, once you start collecting, are guaranteed for life, are periodically adjusted for inflation, and can provide continuing income for your spouse if they outlive you. But did you know that, in most cases, you can’t claim full benefits until a certain age? This age is your full retirement age, or FRA.¹ Find out below what the full retirement age is by birth year, and why it matters below.

What is the full retirement age?

Your FRA varies, depending on when you were born. According to the Social Security Administration, if you were born in 1937 or earlier, your FRA is 65. If you were born in 1960 or later, it’s 67. If you were born between those two years, it’s between 65 and 67. Below is the Social Security retirement age chart:

Here’s the list of birth years and their corresponding FRAs:²

Here’s where it gets interesting. If you were born on the first of the month, your FRA is determined as if you were born in the previous month. So, for example, someone with a September 1 birthday would use August of that year in doing their calculations. If your birthday is January 1, your FRA will be determined as December of the previous year.³

How are Social Security benefits determined?

The first number you need to know about is your average indexed monthly earnings, or AIME, which is your average monthly wages, adjusted for inflation, over the 35 years in which you had the highest earnings.⁴

The next important number is your primary insurance amount, or PIA. Your PIA is calculated based on a percentage of your AIME.⁵

Here’s a breakdown: If you were at full retirement age in 2019, you would receive benefits equal to:⁶

• 90% of your AIME up to $926
• 32% of AIME above $926 but below $5,583
• 15% of AIME above $5,583

These percentages remain the same each year, but the income threshold at which you receive a smaller percentage of AIME adjusts periodically.⁷ You will get the full benefit determined using this Social Security benefit formula only if you retire at full retirement age.

How your FRA affects the amount of your Social Security benefit payments.

This part is pretty simple: Retiring before your FRA results in a reduction of Social Security benefits,⁸ while retiring after your FRA increases your monthly benefits. The earliest you can claim Social Security retirement benefits, in most cases, is age 62, and the latest year in which you can receive an increase in benefits is age 70.⁹

If your FRA is 67, here’s how much your benefits could be reduced — or increased — depending on the age at which you retire:^10,11

The difference can be quite substantial between retiring at 62, full retirement age, and 70. If your monthly benefit would be $1,400 at a full retirement age of 67, it would be $980 if you retire at 62 (30% reduced); or it would increase to $1,736 if you wait until 70 (24% increased).

Deciding when to retire and begin claiming Social Security benefits.

Some people choose or need to retire before FRA because of health issues, lack of job opportunities, or family obligations. Others prefer to retire early so their retirement period can last as long as possible. Keep in mind, there’s an opportunity cost associated with taking payments later and missing out on years of Social Security income. While you will indeed receive higher Social Security benefits later by waiting, there is no guarantee you will live long enough to make up for the missed income.

On the other hand, waiting to claim benefits allows you to maximize Social Security, which is the only source of inflation-protected, guaranteed lifetime retirement income for many retirees. Since Social Security is calculated on your 35 highest-income years, the longer you stay in the workforce, the more income-earning years you’ll have to consider in the calculation.¹²

There’s also a possibility that you’re earning or will earn more per year in the later years of your career than you did earlier — even after adjusting your salary in those early years for inflation. If you work a little bit longer while you’re earning a larger salary, those higher numbers will replace some of the lower numbers used in calculating your 35-year average. Delaying benefits also allows you to raise survivor’s benefits available to your spouse, if you are married, which could help to ensure your spouse has sufficient income even after you’re gone.¹³

Ultimately, you’ll need to assess your health, financial situation, family obligations, and lifestyle factors when deciding whether to claim your benefits at FRA, or claim them before or after your designated age.

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