As a retiree in the United States, your monthly Social Security checks will likely help you make ends meet. Unfortunately, though, the average monthly check isn’t very big, coming in at just $1,503 in 2020.
While the biggest factor affecting the size of that check is your yearly earnings over a lifetime of employment, there’s one decision you’ll make as you near retirement that can also significantly affect how much you get in retirement benefits — the age when you first claim them.
This matters because you have a full retirement age (FRA) designated by law and based on your year of birth that forms the basis for how much you will receive. If you start your benefits right when you hit it, you get your primary insurance amount (also called the standard benefit). But if you decide to start either early or late, your standard benefit will be decreased or increased.
Every future retiree needs to know what FRA is, how it works, and how it affects benefits. With this knowledge, you can make a plan for when to retire and a fully informed choice about when you want to get your first Social Security check.
What is your FRA for Social Security?
Your full retirement age depends upon the year when you were born. The table below shows when your FRA is for each birth year.
As you can see, FRA will start gradually rising for anyone born after 1954. That means that starting in 2021, someone who turns 66 will need to wait a little longer to hit their designated retirement age than those who turned 66 in the decade before.
| Year of Birth | Full Retirement Age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 | 67 |
How does your FRA affect the size of your Social Security checks?
Your standard benefit amount is a percentage of your inflation-adjusted average wages in the 35 years when your earnings were the highest. To get the full amount, you’d need to start your benefits right at FRA — so 66 if you were born in 1954 or a little bit later if you were born after.
If you claim benefits even a month before FRA, you get hit with an early filing penalty. These penalties reduce your standard benefit by 5/9ths of 1% per month for the first 36 months before your designated full retirement age. If you file more than 36 months early, there’s an additional reduction of 5/12ths of 1% per month. This amounts to a reduction in benefits of about 6.7% per year for the first three years and 5% per year for earlier years.
If you instead decide to wait until after FRA, you’ll benefit from a delayed retirement credit that increases the amount you receive. These are worth 2/3rds of 1% per month for each month of delay, so waiting could raise your checks by about 8% per year. The only catch is that these can be earned only until you turn 70, after which you don’t benefit anymore from delaying benefits.
Unfortunately, as FRA moves later, you’ll have less of a chance to earn delayed retirement credit. Those with an FRA of 66 could earn them for four full years, for example, while people whose FRA is 67 will only be able to earn a maximum of three years’ worth of credits.
Don’t claim Social Security until you know how your benefits are calculated
As you can see, it’s essential to understand what your FRA is because there’s a huge difference in the size of your Social Security checks depending on whether you apply at full retirement age, before it, or after it.
But this is just one of the key things to know about how your benefit amount is determined. Our guide to the Social Security benefits formula can fill you in on all the details you need to make decisions about your Social Security benefits that maximize the income you receive.