When you are planning for retirement, it can be daunting, it becomes more strenuous when it comes to understanding the steps to maximizing your Social Security benefits. Your knowledge of the Full Retirement Age (FRA) is quite vital in these financial equations.
Based on your earnings, you can 100% claim your social benefits once you have reached this age. One question many do ask is “How do you know when that is, and why does it matter?” Let’s break it down.
What Is the Full Retirement Age (FRA)?
In the most simple terms, the Full Retirement Age (FRA) is the legally recognized age at which you are eligible to obtain your full Social Security retirement benefits. However, this age is not the same for Americans. One major fact about the FRA is that it depends on the year you were born.
A quick illustration: An individual born between 1943 and 1954 will have an FRA at the age of 66. For an individual born in 1960 or later, their FRA will be at 67.
Furthermore, for those individuals born between 1955 and 1959, their FRA gradually increases by two months each year. Having the knowledge of your FRA is quite important because it helps you to determine when you can start receiving your full benefit without having reductions.
Why Does FRA Matter?
If you have an understanding of your FRA, it will give you an edge when evaluating your financial budget. It also matters because it affects the total amount of money you will receive from social benefits a the end of the month. One thing you should also note is that if you want to start receiving your social benefits before reaching your FRA, then note that your monthly benefits experience some reduction.
Another additional piece of information is that, if a worker delays taking social benefits, then they can earn a “delayed retirement credit,” which will in turn increase their social benefit. Pay attention to this. If an individual delays taking Social Security beyond their FRA, up until the age of 70, then their monthly social benefit will be increased to about 8%.
In other words, this means if your FRA is at 67 years and you delay your takings until 70 before you start to receive your social benefits, at the end of the day, your benefit will increase to about 24% higher than if you had started receiving at the age of 67.
When Should You Start Collecting Benefits?
Deciding when to start collecting Social Security benefits is left for you to answer. This is a personalized question about your health, financial needs, and retirement goals.
If you require the money sooner: If you are in financial need or maybe you have some health concerns, then this will affect your decision. You could even decide to take your social benefits as early as 62. Don’t mind if you get a reduced payment monthly; put yourself first in this situation.
