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Chapter 3: Four Categories for Calculating Benefits

Chapter 2: How are Benefits Determined?

There are four categories that determine how your benefit is calculated and they are all dependent upon the age in which you begin receiving benefits. These include:

  1. Full Retirement Age Benefit
  2. Early Benefit
  3. Delayed Benefit
  4. Break Even Benefit

1. Full Retirement Age Benefit (FRA)

The Full Retirement Age is the age (66-67 years old) at which you can begin receiving your full retirement benefit. FRA is determined by the year of your birth.

You can see in the chart below how old you need to be to earn your Full Retirement Age Social Security benefit, based on your year of birth.

Year of BirthFull Retirement Age
1943-5466
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 or later67

Find the year in which you were born in the column on the left. Trace over to the column on the right to see the age you need to be to receive Full Retirement Age Social Security benefits.

Example: If you were born in 1943, your Full Retirement Age is 66 years old. If you were born in 1957, your FRA is 66 years and 6 months. If you were born in 1960 or later, your Full Retirement Age is currently age 67.

Will the FRA Rules Change?

Full Retirement Age rules are expected to change in the future due to legislative reform. However, if it does change in the future, it will most likely affect people born in 1960 or later. It most likely will not impact people born prior to 1960.

2. Early Benefit

Can I Start Receiving Benefits Earlier Than My Full Retirement Age?

Yes! You can start receiving your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your Full Retirement Age benefit amount. If you start your benefits early, they will be reduced based on the number of months you will be receiving benefits before you reach your full retirement age.

Note, once you begin receiving benefits, the percentage of benefit you receive will be locked in permanently. For example, if you file at age 62 and you have a 25% reduction in benefits, you will always have a 25% reduction in benefits. Even any spousal or divorced-spousal will be reduced by 25%. The only thing that is not reduced are survivor benefits.

How Can I Determine My Early Benefit Amount?

Your Social Security statement provides you with your Full Retirement Age (FRA) benefit, a smaller number, and a larger number, based on your lifetime reported earnings.

Depending on your age when you apply early, your benefit will be reduced. Use the chart below for examples.

Apply at AgeIf FRA = 66If FRA = 67
6275.0%70.0%
6380.0%75.0%
6486.7%80.0%
6593.3%86.7%
66100%93.3%
67100%

Examples: If you apply at age 62 but your Full Retirement Age is 66, then you would receive 75% of your FRA benefit.

If you apply at age 62 but your FRA is 67, you will receive 70% of your FRA benefits.

If you apply at age 62 but your FRA is somewhere between 66 and 67, a graduated number will be used to determine your benefit.

Bottom Line: Every year you wait to begin receiving your Social Security benefit, you get closer to earning 100% of your available benefit.

3. Delayed Benefit

If you decide to delay benefits or wait until after your Full Retirement Age to apply for benefits, you will earn a little bonus.

Apply at AgeIf FRA = 66If FRA = 67
66100%93.3%
67108%100%
68116%108%
69124%116%
70132%124%

Examples: If you wait until age 70 to apply for benefits, and your Full Retirement Age is 66, you will get 132% of your FRA benefit.

If you wait to apply at age 70 and your Full Retirement Age is 67, you will get 124% of your FRA benefit.

4. Break Even Benefit

Many want to know how to maximize the amount they receive from Social Security. Your breakeven age is the approximate age range you are expected to break even on your benefit, depending on your filing age.

If your Full Retirement Age is 66, regardless of when you file, your breakeven age is between ages 79-82. If you are likely to live past age 82, then you will receive more money from Social Security by waiting as long as possible to file, ideally at the age of 70 when you will receive 132% of your Full Retirement Age benefit.

If your Full Retirement Age is 67, regardless of when you file, your breakeven age is between ages 80-82. If you are likely to live past age 82, then you will receive more money from Social Security by waiting as long as possible to file, ideally at age 70 when you will receive 124% of your Full Retirement Age benefit.

Bottom Line: Cost-of-living adjustments (COLAs) will magnify the impact of receiving early or delayed retirement benefits.

The longer you live, the more beneficial it is to delay drawing benefits. If your family members tend to live a long time and you are in good health, you might want to consider delaying benefits.

Chapter 4: Three Kinds of Social Security Benefits