Millions of Americans planning for retirement will soon face a new benchmark, as the full retirement age for Social Security is set to reach 67 in 2026. This change, affecting anyone born in 1960 or later, marks the final step of a multi-decade plan to adjust the nation's retirement system.
The increase is the culmination of the 1983 Social Security Amendments, legislation designed to ensure the long-term financial stability of the program. For those approaching their retirement years, understanding this shift is critical for maximizing benefits and making informed financial decisions.
Key Takeaways
- The full retirement age (FRA) for Social Security will officially become 67 for individuals born in 1960 or later.
- This change is the final phase of a gradual increase established by a congressional amendment in 1983.
- Claiming benefits before reaching the full retirement age results in a permanent reduction in monthly payments.
- Delaying benefits past the full retirement age, up to age 70, can significantly increase monthly payments.
The Final Step in a Long-Term Plan
The concept of a "full retirement age" (FRA) is central to the Social Security system. It is the specific age at which an individual is eligible to receive their entire, unreduced retirement benefit. This age is determined by one's year of birth.
For years, the FRA has been incrementally rising. The current age for those born in 1959 is 66 years and 10 months. The upcoming change will push this to a flat 67, impacting a large cohort of future retirees. This means someone born in 1960 will need to wait until 2027 to reach their full retirement age and claim their maximum standard benefit.
A Look Back: The 1983 Amendments
The gradual increase in the retirement age was not a recent decision. It was enacted as part of the Social Security Amendments of 1983. Faced with projections of financial shortfalls, lawmakers passed bipartisan legislation to shore up the system's finances. A key component of this law was to slowly raise the full retirement age from 65 to 67 over several decades, reflecting increasing life expectancies.
How Your Birth Year Affects Your Benefits
The Social Security Administration (SSA) maintains a clear schedule based on birth year. While the age of 67 now applies to a large group, those born earlier have different FRAs.
- Born 1943-1954: Full retirement age is 66.
- Born 1955: 66 years and 2 months.
- Born 1956: 66 years and 4 months.
- Born 1957: 66 years and 6 months.
- Born 1958: 66 years and 8 months.
- Born 1959: 66 years and 10 months.
- Born 1960 or later: 67 years.
This staggered approach was designed to soften the impact of the change, giving people time to adjust their long-term financial plans.
The Financial Implications of Claiming Early or Late
While the FRA is changing, the option to claim Social Security benefits as early as age 62 remains. However, making this choice comes with a significant and permanent reduction in monthly payments.
According to the Social Security Administration, claiming benefits at age 62 when your full retirement age is 67 results in a benefit reduction of about 30%. This reduction is permanent and will affect the amount you receive for the rest of your life.
The Power of Waiting
Conversely, there is a powerful financial incentive to delay claiming benefits. For every year you wait past your full retirement age (up to age 70), your benefit amount increases. This is known as delayed retirement credits. Waiting until age 70 can increase your monthly benefit by as much as 24% compared to claiming at a full retirement age of 67.
This decision creates a crucial trade-off for retirees. Claiming early provides income sooner, but at a lower rate. Waiting provides a larger monthly check later, which can be a valuable hedge against outliving your savings.
"The decision of when to start receiving retirement benefits is personal and depends on a variety of factors, such as your current cash needs, your health and family longevity, and whether you plan to work in retirement," the SSA advises individuals considering their options.
Broader Context of Social Security Adjustments
The shift in retirement age is part of the ongoing adjustments made to the Social Security program, which currently provides benefits to nearly 75 million people, including retirees, individuals with disabilities, and their families.
Another key feature of the system is the annual cost-of-living adjustment (COLA). These adjustments are intended to help benefits keep pace with inflation. Recent years have seen significant fluctuations in the COLA.
For example, recipients saw a historic 8.7% increase in 2023 due to high inflation. This was followed by a more moderate 3.2% increase in 2024. Over the last two decades, the COLA has averaged approximately 2.6%, highlighting the unusual nature of the recent large adjustments.
As the full retirement age settles at 67, future retirees must factor this new reality into their savings strategies and timelines. Using the tools available on the Social Security Administration's website, such as the retirement age calculator, can help individuals determine their specific FRA and project their potential benefits at different claiming ages.
