Retirement Age

By Jennifer Scherf

The earliest age at which (reduced) Social Security retirement benefits are payable is 62. When you are eligible for full retirement benefits depends on what year you were born. People born before 1938 have what most consider the “normal” retirement age of 65.

Retirement age increases by two months for each year of birth until 1943. People born between 1943 and 1955 reach full retirement age at 66 years of age. Beginning again for those born in 1956, retirement age increases by two months for each year up until 1960, at which point full retirement benefits are paid at age 67. This pattern continues.

This gradation was done for several reasons. First, we are living longer than we were when Social Security began. That means people will draw out more from the system between retirement age and death than was originally planned for. Another reason is that baby boomers are now reaching retirement age, and their draw on the system is going to be exponentially greater than it has ever been before because of their numbers.

A worker who begins receiving benefits before normal retirement age has their benefit reduced based on the number of months before normal retirement age they start drawing their benefits. The benefit is reduced five-ninths of one percent for each month for the first 36 months and then five-twelfths of one percent for each additional month. This sounds complex but makes sense when you look at the big picture. Under this formula, someone drawing retirement benefits at age 62 will receive 80 percent of their full benefits if their retirement age is 65. They will receive 75 percent of full benefits if their retirement age is 66, and 70 percent of full benefits if their retirement age is 67. This percentage is graded because they are taking their benefits earlier based on the changing full retirement age. That way, anyone can draw benefits at age 62, but how much of the full benefit they will receive is dependent on the year of their birth.

The opposite is true if you wait to start drawing retirement benefits. A worker who delays starting retirement benefits past normal retirement age earns delayed retirement credits that increase their benefit amount each year until they reach age 70.

While Social Security was begun to assist workers with saving for old age, the Social Security Administration is trying to wean us off depending on it for all retirement income. These and other measures are what keep rumors that Social Security is going bankrupt just rumors.