Social Security: Full retirement age starts slow rise to 67 for the first time since 2005Submitted by Younity Wealth Partners on January 19th, 2017
Since 2005, the FRA has been 66. But as of January 1, 2017, the FRA will begin a long slow climb.
The significance of the increase in full retirement age from 66, to 66-and-2-months instead, is that now trying to take benefits at 66 is actually an “early” benefits election, resulting in a 1.1% reduction for starting payments 2 months before full retirement age.
For those who want to start as early as possible – at age 62 – doing so is no longer a decision to take benefits 4 years early. Instead, it’s 4 years and 2 months early, which means the age-62 benefits reduction is now 25.83% (instead of just 25%). Similarly, delaying to the maximum age 70 would not earn 4 years’ worth of Delayed Retirement Credits, but instead only 3 years and 10 months of DRCs, for a total increase of 30.67% (instead of the ‘full’ 32%).
The end result: benefits can never quite be as high as they were before at the maximum, and at any given age, Social Security benefits take a slight haircut.