Social Security: What’s Your Full Retirement Age?

Updated : Oct 24, 2019 in Articles

Social Security: What’s Your Full Retirement Age?


Hi, welcome back to the Happiness IRA
where we talk about how money weaves itself into your life. So today we’re
going to be talking about your full retirement age. Full retirement age is a
specific term to Social Security and it helps you determine when you can get
your entire benefit without it being reduced.
Now when I say full retirement age you might be sitting there thinking, “Wait, isn’t this
America? Can’t I retire anytime I want? No government entity can tell me when to retire!” And that, my friends, is the truth
you can decide any time that you retire but for social security purposes and
collecting that pension that government pension that you have created over time
you need to know when you can get the most out of it. You might be interested
to know that Social Security when it was initially created the full retirement
age aligned with Medicare. We trigger our made Medicare at 65 but (and that was how
it was with our Social Security) but it’s changed as our longevity has increased
and people are living longer in retirement. So your full retirement age
is dependent on your year of birth. So it changes from person to person depending
on when you were born. Your full retirement age is going to (as of
November 2017) is going to vary somewhere between 66 and 67. But it gets a little
bit complicated in between and so often times people are just a little bit
confused with what their actual full retirement age is. So if you are born
1954 or before your full retirement age is 66. If you were born 1960 or after
your full retirement age 67. You’ll notice I didn’t say anything about 1955,
’56, ’57, ’58, or ’59. That’s five years and we need to figure out when is that person’s
full retirement age it’s not 66 and it’s not 67; it’s somewhere in between. It’s
not as difficult as you might think. For every year after 1954, you add on two
months to your full retirement age 1954 or before their full retirement age is
66 so if I’m born in 55 then my full retirement
66 and two months. If I’m born in 1956 its 66 and four months, and on, and on, and
on until you get to 1960 at which time the full retirement age changes to 67.
Okay so now you know your full retirement age. You know when you can get
that full unreduced benefit but you’ve probably been told by everybody who
talks about Social Security that you can start collecting it at age 62 and it
doesn’t make that much of a difference. I would beg to differ very strongly. At
your full retirement age you get a hundred percent of the benefits that
that is calculated for you. If you take your benefit a year or more before it
gets reduced by between six and seven percent per year. So if my full
retirement age is 66 and I’m collecting at 62 I’ve got 65, 64, 63, 62 that’s four years difference and my benefits actually reduced down to
seventy five percent of what it could be. If your full retirement age is 67, it’s
even worse. So instead of 75 percent you only get 70 percent of your
full benefit. Dollar-wise in a month over a month situation, it might not look like
that much of a difference but compounded year over year (especially if they’re
cost-of-living adjustments) that is a very big decision to make just to
collect the at the age 62 rather than waiting to your full retirement age. Now
I have just grazed the surface of one little area of Social Security. Social
Security in itself is a beast. There’s lots of different rules and variations
on what happens when we collect a certain times under certain
circumstances. So you are welcome to go on the internet and Google every search
that you can think of. However you could also subscribe below and follow along I
produce a video a week and they all happen to tie around two areas. One is
our behavior finance; why we’re doing what we’re doing with our money.
The other area is retirement topics so it’s not specific to social security but
that is one of the subtopics of retirement. Someday if you’re lucky I
will go into how your PIA, your primary insurance amount, that 100% benefit that
I talk about it full retirement age. I will go into how that’s calculated but
what’s gonna have to happen is I’m gonna have to have a white board and tons of
coffee so that I can clearly tell you what’s going on. Rather than delve down
that murky path today, I don’t have a white board, I don’t have coffee, so we
may as well conclude our time together and you take care.

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