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What Is The Social Security Retirement Age?
As each year passes, the age at which you can collect benefits increases, courtesy of the Social Security Administration (SSA). Why the increase? SSA began the practice several years ago to help the beleaguered benefit system by delaying payouts. In 2018, the full retirement age will increase by two months; you must be age 66 and four months to be considered as full retirement age. The 2018 change affects individuals born after 1956.
Retiring baby boomers are creating a financial challenge for the SSA. It is the largest generation in American history. In 2007, the oldest boomers turned 62, and they just keep coming!
Added to that is the fact that most Americans are electing to claim their retirement benefits early rather than waiting until, but so is the fact that most Americans are electing to claim SSA retirement benefits before reaching the full retirement age. Three-quarters of early claimants are women, and over half are men. Very few are waiting until their exact full retirement age.
Why are individuals claiming early?
The main reason is because the SSA benefit has not kept up with cost of living increases. Today’s seniors are paying more for groceries, gas and prescription drugs, and since they’re on a fixed income, those increases are taking a toll on overall money availability. In 2018, a Cost of Living Adjustment (COLA) is expected. Even though it will be the largest COLA adjustment in recent years, it only makes a dent in rising costs.
The result is that COLA increases won’t catch seniors up, so they’re claiming early benefits.
Your age and your lifetime earnings determine your overall SSA retirement benefit. You can claim anytime between age 62 and 70. As you might expect, an early claiming comes with strict penalties. For example, if you claim at age 62 but your full retirement age is 67, the compounded effect of that early claim is an overall 30 percent reduction in benefits. Early claims will get you short-term gains in cash, but long-term, an early claim will have a significant impact.
Depending on your financial needs, it is better if you can claim when you’ve reached your full retirement age. You can even claim later, up to age 70, which can increase your income by as much as eight percent.
Examine your personal situation, and see where you can retire between age 62 to 70. The longer you can wait, the better off you’ll be.