Full Retirement Age vs. Early Retirement

Deciding when to claim Social Security benefits is one of the most important retirement decisions you'll make. The timing of your claim can significantly impact your monthly benefits and long-term financial health.

What is Full Retirement Age (FRA)?

Full Retirement Age (FRA) is the age at which you are eligible to receive your full Social Security benefits. For most people, FRA falls between 66 and 67, depending on the year you were born. Claiming benefits at your FRA ensures you receive 100% of your entitled monthly benefit.

Benefits of Claiming at Full Retirement Age:

• Maximized Monthly Benefits: At FRA, you receive your full Social Security benefit without any reductions.
• Spousal and Survivor Benefits: Spouses and survivors can also maximize their benefits if you wait until FRA to claim.
• No Earnings Limit: Once you reach FRA, there is no limit on how much you can earn while receiving Social Security.

What is Early Retirement?

Early retirement allows you to claim Social Security benefits as early as age 62, but your monthly benefit will be permanently reduced. The earlier you claim, the larger the reduction in benefits, which can be as much as 30%.

Benefits of Claiming Early Retirement:

• Access to Benefits Sooner: You receive benefits earlier, which may be helpful if you need the income before reaching FRA.
• More Time to Enjoy Retirement: Some retirees prioritize having more time to travel or pursue hobbies while they're younger and more active.

Key Considerations

Here are a few important factors to keep in mind when deciding between early and full retirement:

• Benefit Reductions: Claiming before your FRA will permanently reduce your monthly benefits.
• Life Expectancy: If you expect to live longer, waiting until FRA—or even delaying until 70—may result in higher total lifetime benefits.
• Financial Needs: If you need income sooner or cannot continue working, claiming early might make sense despite the reduction in benefits.

Delaying Benefits for Increased Payments

If you delay claiming benefits past your FRA, you can increase your monthly benefit by approximately 8% each year, up until age 70. This strategy, known as "delayed retirement credits," is often recommended for those in good health who anticipate living longer.

Conclusion

Choosing between claiming early retirement or waiting until your Full Retirement Age depends on your personal circumstances, financial needs, and life expectancy. While early retirement offers flexibility and access to benefits sooner, waiting until FRA or beyond can provide significantly higher monthly benefits, improving long-term financial stability.