This is the most important number retirees need to know


Jhere are a lot of things that seniors need to know to plan their retirement well and ensure that they maximize their monthly income. But one crucial number stands out among all the others. Retirees need to be aware of this to make the best choice about when to claim Social Security.

Not knowing this number could be a costly mistake, as it could inadvertently lead to the wrong choice about starting retirement benefits that costs hundreds of dollars a month in missed income.

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Every retiree should know this social security number

The one crucial number every senior needs to know is their full retirement age (FRA).

Now, you may not have heard of the full retirement age, but it’s important to know it because it can determine how much Social Security income you receive. You see, the Social Security Administration assigns one to everyone based on their year of birth. While FRA was 65, it is now at least 66 and four months for anyone turning 66 this year or later. And that could be as late as age 67.

The table below shows exactly when yours is, based on your date of birth.

year of birth

Full retirement age

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and after

67

Data source: Social Security Administration.

Why do you need to know your FRA?

Now that you know your full retirement age, you may be wondering why it matters. The main reason is that your choice of when to claim Social Security benefits, versus FRA, will determine how much monthly income you get.

If you want your standard benefit — which is a percentage of wages earned during your highest earning 35 years — you must receive your first Social Security check exactly at your full retirement age. For those turning 66 this year, that would be 66 and 4 months.

But you have the option of starting benefits long before you hit that milestone, because checks become available as soon as you turn 62. Unfortunately, if you choose to deposit early, a monthly penalty applies for each month you receive a check before FRA. So if you were born in 1956 and filed for benefits from your 66th birthday, you would be hit with four months of early filing penalties.

These penalties are equal to five ninths of 1% per month for the first 36 months and five twelfths of 1% for each subsequent month. Thus, a claim made two months in advance would reduce your monthly payment by approximately 1.1%. Applying a year earlier, on the other hand, would result in a 6.7% reduction in the amount of your Social Security checks, while applying five years earlier would leave you 30% less.

You also have the option of delaying the start of your Social Security retirement income. For each month after FRA that you give up a check, you get a benefit increase of two-thirds of 1% through Deferred Retirement Credits. These are ultimately worth an 8% increase in benefits for each year of delay, although they can only be earned until age 70.

If you don’t know your FRA, you can’t calculate the impact of your age when you apply for benefits on the money Social Security provides you. Since these retirement benefits are a crucial source of income for most seniors, knowing when the Social Security Administration says you can retire with your standard benefit is the best way to make the right choices about your finances in your last years.

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