The Most Important Social Security Schedule You’ll Ever See | Smart Change: Personal Finance
(Katie Brockman)
Saving for retirement is tough, and many seniors end up relying heavily on Social Security to make ends meet in retirement. While this is not necessarily a bad thing, it is important that you understand how the program works to maximize your benefits.
One of the most important factors affecting your benefit amount (FRA) is your full retirement age (FRA). However, only 16% of adults know their accurate financial assessment according to a 2021 survey from the National Retirement Institute.
Learning about your FRA can lead to better decisions about Social Security and even help you get higher compensation each month. Here’s how.
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What is your FRA?
Your FRA is the age at which you will receive the full benefit amount you are entitled to, based on your earnings history. Your exact HR assessment will depend on the year you were born, but all will fall between the ages of 66 and 67.
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| The year you were born | full retirement age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
Source: Social Security Administration. Scheme by the author.
You don’t have to wait to file your FRA for Social Security, but if you claim early, you’ll receive a reduced amount of benefits. If your FRA is 67 years old, for example, but you applied as soon as possible at age 62, your payments will be reduced by 30%.
It is also possible to delay benefits beyond the FRA. If you wait until the age of 70 to file, you will receive the full maturity amount, plus a bonus of up to 32% each month. You can delay after age 70, but you will not get any additional benefits for doing so.
Also keep in mind that once you apply, these benefit adjustments are permanent. If you order early, be prepared to receive smaller checks for the rest of your life. And if you delay benefits, you’ll collect larger payments forever — no matter how long you live.
Why does your FRA matter
There is not necessarily a “right” time to file a Social Security application. It will be best for some people to claim as soon as possible, while others may choose to wait. However, knowing your own HR assessment can help you prepare better.
Most adults believe that their FRA is lower than it actually is. In fact, the average baby boomer thinks their finances have an assessment of 64, according to a Nationwide survey.
If you head into retirement assuming your HR stat is 64, for example, you may start to claim at this age expecting the full benefit amount. In effect, you claim early, and your monthly payments will be permanently reduced.
Similarly, at age 67 you may think you are delaying benefits, but this may actually be your FRA. If you expect a higher amount for the delay, you may be surprised when you don’t receive a reward.
Social Security benefits can seem complicated and confusing, but it’s helpful to at least understand the basics. When you know your HR assessment report, it will be easier to plan when to claim, and you can head into retirement as prepared as possible.
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