US News’ recent article entitled “The Social Security Retirement Age Increases in 2022” examines the way in which the Social Security retirement age is changing for Baby Boomers and beyond, and what this means for your retirement payments.
The full retirement age (FRA) was 65 for those born in 1937 or earlier. Those born between 1943 and 1954, including the first wave of baby boomers, have a full retirement age of 66. The full retirement age further increases in two-month chunks each year to 66 and 10 months for those born in 1959. That is up from 66 and eight months for those with a birth year of 1958. The FRA for those who turn age 62 in 2022, born in 1960, is now 67. The full retirement age will remain age 67 for everyone born in 1960 or later.
Workers who are eligible for Social Security can being receiving payments at age 62, regardless of their full retirement age. However, the benefit reduction for early claiming is more for those who have an older retirement age. You get less if you start early or more if you delay until later. Every month you delay Social Security up to age 70 gets you a higher monthly payment for life. For Baby Boomers, many of whom don’t have a pension to rely on, this has a major impact on their options in retirement.
For a worker eligible for a $1,000 monthly Social Security benefit at his full retirement age, claiming at age 62 will reduce his monthly payment to $750 if his birth year is 1954 and $700 if he was born in 1960.
Social Security’s annual cost-of-living adjustments will be also applied to these reduced payments, resulting in a smaller dollar value of the inflation adjustments.
You can up your monthly payments by delaying claiming Social Security after your FRA age up until age 70. However, those with an older retirement age have fewer months to delay claiming Social Security and less of an opportunity to earn delayed retirement credits. If a person files at age 70, with a full retirement age of 66, it means they waited 48 months beyond full retirement age, so they would get 132% of their primary insurance amount. However, if they file at 70 with a full retirement age of 66 and six months, that means they waited 42 months beyond full retirement age, so they would only get 128% of their primary insurance amount.
Your age when you start to claim Social Security significantly impacts the amount you will receive throughout retirement. Whether you are a Baby Boomer, or Gen Xer, there are ways to boost your monthly Social Security payments. You can delay claiming, continue to work and coordinate benefits with a spouse.
Talk with a Certified Financial Professional and an experienced Elder Law Attorney to develop a comprehensive retirement plan.
Reference: US News (Jan. 24, 2022) “The Social Security Retirement Age Increases in 2022”