Every laborer ought to execute a significant change in their Social Security strategy by 2025.
Retiring can be a costly endeavor, and Social Security often plays a significant role in helping Americans make ends meet. According to a 2024 report from the Transamerica Center for Retirement Studies, 43% of baby boomers rely on Social Security as their primary source of income in retirement.
Regardless of your retirement timeline, it's crucial to understand how Social Security fits into your retirement plans. One important step is to familiarize yourself with your full retirement age (FRA), a figure that can significantly impact your income.
Your FRA is the age at which you become eligible to receive your full Social Security benefit based on your career earnings and work history. This amount is displayed when you check your benefits estimate online, but if you're unsure about your exact FRA, it could impact your income by hundreds of dollars monthly.
The average American between the ages of 60 and 65 believes their FRA is 64 years old, but the actual age varies depending on your birth year. For individuals born between 1938 and 1959, the FRA is 66 years old, while for those born in 1960 and later, it's 67 years old.
Filing for benefits before reaching your FRA can lead to significant reductions in your monthly income. For example, if your FRA is 67, and you file at 64, your benefits will be reduced by 20%. If you file as soon as possible at age 62, your benefit amount will be permanently reduced by 30%. These reductions can translate to hundreds of dollars monthly, potentially impacting your retirement savings significantly.
While filing early may seem like an unnecessary sacrifice, there are valid reasons to consider it. For instance, it can be beneficial for individuals with declining health or those who want to retire in their early 60s to enjoy an active retirement. Filing early may also be part of a strategy with your spouse, allowing one to collect early income boosts while the other delays claiming for larger checks.
Knowing your exact FRA is essential to making informed decisions about your retirement plans. By understanding how your age affects your Social Security benefits, you can plan accordingly to meet your unique retirement goals. Social Security often serves as a crucial source of income for many older adults, and being well-informed can help you maximize your benefits and ensure a comfortable retirement.
[1] Social Security Administration. (2025). Retirement Earnings Test. Retrieved from https://www.ssa.gov/retire2/retirechart.htm[2] Social Security Administration. (2024). Retirement Benefits. Retrieved from https://www.ssa.gov/planners/retire/retirechart4.htm[3] Social Security Administration. (2024). FRA and Early Retirement. Retrieved from https://www.ssa.gov/planners/retire/retirechart3.htm
In managing your retirement plans, it's essential to consider how finance and money are linked to your Social Security benefits. The age at which you start receiving your full Social Security benefit, known as the Full Retirement Age (FRA), can significantly impact your retirement income. If you decide to retire early and start receiving your benefits before reaching your FRA, you could face reductions in your monthly income, potentially affecting your retirement savings significantly. For instance, if your FRA is 67 and you start receiving benefits at 64, your income could be reduced by 20%. Understanding your FRA and how it affects your retirement income is crucial for making informed financial decisions and securing a comfortable retirement, as Social Security often serves as a primary source of income for many Americans in their retirement years.
