The Social Security system in the United States is designed to provide financial support to retirees, disabled individuals, and their families. However, understanding when and how to claim benefits can impact your monthly retirement income. For those born in 1959, the Full Retirement Age (FRA) holds particular importance as it affects the percentage of benefits you can receive.
What is the Full Retirement Age (FRA)?
The Full Retirement Age (FRA) is when an individual becomes eligible to receive 100% of their Social Security retirement benefits. This age varies depending on the year you were born, and for those born in 1959, the FRA is 66 years and 10 months.
This increase in retirement age stems from changes made under the Social Security Amendments of 1983. Before these amendments, the FRA was 65 for everyone. However, due to increasing life expectancy and a desire to ensure the financial stability of the Social Security system, Congress enacted a gradual increase in the FRA. For those born in 1960 and later, the FRA has risen to 67.
Full Retirement Age for those born in 1959
If you were born in 1959, your FRA is 66 years and 10 months. This means you can start collecting your full Social Security benefits when you reach that age, with no reduction in your monthly benefits.
Choosing when to start receiving your Social Security benefits can greatly impact the amount of your monthly payment. If you choose to claim your benefits at your FRA of 66 years and 10 months, you will receive 100% of your entitled benefit. However, your monthly payments will increase if you delay claiming your benefits.
Delaying benefits beyond FRA
One of the strategic decisions retirees often consider is whether to delay claiming Social Security benefits beyond their FRA. For every month you delay receiving benefits after reaching your FRA, your benefit amount will increase. Specifically, for those born in 1959, the increase is roughly 8% per year until you reach age 70.
If you wait until age 70 to claim benefits, you will receive 125.3% of your full benefit. This is because you’ve delayed claiming benefits for a total of 38 months beyond your FRA. This strategy is particularly beneficial for those who are in good health and anticipate living longer, as the increased monthly payments could provide more financial security later in life.
For example, if your full benefit at age 66 and 10 months is $2,000 per month, delaying benefits until age 70 would increase your payment to approximately $2,506 per month. However, once you reach age 70, the benefits stop increasing, so there’s no advantage to delaying beyond that point.
Early retirement and how it affects your benefits
Although the FRA for those born in 1959 is 66 years and 10 months, you can begin claiming Social Security benefits as early as age 62. However, doing so results in a permanently reduced monthly payment. If you start collecting benefits at age 62, you will receive only about 70.8% of your full benefit.
The reduction is calculated based on how early you begin claiming your benefits, and this reduction remains in place for the rest of your life. The closer you are to your FRA when you start claiming benefits, the less significant the reduction will be. For example, if you start claiming benefits at age 63, your benefits will be approximately 75.8% of your full benefit, while claiming at age 64 would give you around 80.6%.
