The Social Security Administration (SSA) has provisions that gradually increase the Full Retirement Age (FRA) depending on your year of birth. Here’s an overview of the key provisions affecting retirement age in the upcoming years:
1. Full Retirement Age (FRA) Adjustments
- Born in 1955: FRA is 66 years and 2 months.
- Born in 1956: FRA is 66 years and 4 months.
- Born in 1957: FRA is 66 years and 6 months.
- Born in 1958: FRA is 66 years and 8 months.
- Born in 1959: FRA is 66 years and 10 months.
- Born in 1960 or later: FRA is 67 years.
2. Early Retirement
- You can start receiving Social Security benefits as early as age 62. However, if you choose to retire before reaching your FRA, your monthly benefit amount will be reduced permanently.
- For example, if your FRA is 67 and you choose to retire at 62, your benefits could be reduced by as much as 30%.
3. Delayed Retirement Credits
- If you delay receiving Social Security benefits beyond your FRA, you can increase your benefits by a certain percentage each year until age 70. The increase is about 8% per year.
4. Impact of Changes on Spousal and Survivor Benefits
- Spousal benefits are also affected by the changes in FRA. The spousal benefit can be up to 50% of the worker’s FRA benefit amount if the spouse waits until FRA to claim benefits.
- Survivor benefits are calculated based on the deceased spouse’s benefit at the time of death, which can be impacted by whether the deceased spouse took benefits early or delayed them.
5. Legislative Considerations
- There are ongoing discussions and proposals to raise the Social Security normal retirement age. Currently, the full retirement age is 67 for those born in 1960 or later. However, various proposals suggest gradually increasing it to 68, 69, or even 70 over time.
- The main reason behind these proposals is to ensure the long-term solvency of the Social Security program. As people live longer and healthier lives, increasing the retirement age can help reduce the program's costs. However, it's important to note that no legislation has been passed to implement these changes yet, and the topic remains a subject of debate.
Some of the prominent proposals being discussed include:
- Gradually increasing the full retirement age to 68: This is a common proposal, suggesting a gradual increase in the full retirement age over several years, eventually reaching 68 for those born in a certain year or later. This would affect when individuals can claim full Social Security benefits without any reductions.
- Gradually increasing the full retirement age to 69 or 70: Some proposals go further, suggesting an even higher full retirement age, reaching 69 or even 70 over time. This would further delay when individuals can claim full benefits.
- Indexing the full retirement age to longevity: This proposal suggests linking the full retirement age to increases in life expectancy, meaning it would automatically adjust upwards as people live longer. This approach aims to maintain a balance between the program's costs and the changing demographics.
- Increasing the early eligibility age: In addition to raising the full retirement age, some proposals also suggest increasing the early eligibility age, currently set at 62. This would mean individuals would have to wait longer before they could claim any Social Security benefits, even with reductions.
These are just some of the key proposals being debated. The specifics of each proposal can vary, and the ultimate outcome will depend on the political process and any potential legislative action.