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2/24/17, 12:51 PMSocial Security Begins to Increase the Retirement Age | Social Security | US News

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Social Security Begins to Increase the Retirement Age

Most baby boomers can receive the full amount of Social Security they have earned atage 66. However, retirees who will turn 62 in 2017 need to wait an extra two months tocollect their full Social Security payments. Starting this year the retirement age begins agradual increase toward age 67. Here's how the older retirement age will impact howmuch you receive from Social Security.

A longer wait to claim full payments. The Social Security full retirement age is 66 forpeople born between 1943 and 1954. For those born during the five years after that, thefull retirement age will gradually increase in two-month increments from 66 and 2 monthsfor people born in 1955 to 66 and 10 months for those born in 1959. The full retirementage is 67 for everyone born in 1960 or later.

Bigger reductions for early claiming. All retirees can begin collecting a reduced SocialSecurity payment at age 62. But the higher your full retirement age, the bigger yourbenefit reduction if you sign up for Social Security on your 62nd birthday. "The change infull retirement age means a substantial benefit difference for those reaching age 62 thisyear and beyond," says William Meyer, founder and managing principal of Social SecuritySolutions, a company that analyzes Social Security claiming strategies. "Claiming at age62 is a bigger reduction. There are simply more months of reductions if [someone's] fullretirement age is 67 versus 66."

A retiree with a full retirement age of 66 who starts Social Security payments at age 62will get 25 percent smaller monthly payments. However, those who will turn 62 in 2017with a full retirement age of 66 and 2 months will see a slightly larger deduction inmonthly payments of around 26 percent if they claim payments at age 62. And workerswith a full retirement age of 67 will experience a 30 percent reduction in their monthlybenefit amount if they begin collecting Social Security at age 62. For example, anemployee eligible for a full retirement benefit of $2,000 who claims early at age 62 wouldget $1,500 per month if his full retirement age is 66. But if he was born a few years laterand his full retirement age is 67, he will get $1,400 per month if he begins collecting SocialSecurity at age 62.

A smaller benefit for waiting. You can increase your monthly Social Security benefit by

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delaying when you start payments up until age 70. The amount of the increase dependson your full retirement age, with the biggest bonus for delayed claiming going to thosewith the lowest full retirement age. Baby boomers with a full retirement age of 66 couldincrease their Social Security benefit by 32 percent by waiting four years until age 70 tosign up. As the full retirement age increases there is less of an opportunity to earndelayed retirement credits that increase your benefit. "Your age-70 payment is based onthe number of months from your full retirement age to age 70," says Andy Landis, authorof "Social Security: The Inside Story." "You get two fewer delayed retirement creditsbecause of the change in your full retirement age." People with a full retirement age of 67will only get 24 percent more by claiming Social Security payments beginning at age 70,because they are only eligible to collect delayed retirement credits for three years.

Deciding when to collect. Signing up for Social Security early means you collect smallermonthly payments over a greater number of years. Those who delay claiming SocialSecurity collect bigger payments later on in retirement. The better claiming strategydepends on how long you and your spouse will live, with those living into their 90s andbeyond having the most to gain by delaying claiming Social Security. "The vast majority ofpeople take Social Security within a few months of retiring or turning age 62, but thatleaves a lot of money on the table," says Wei-Yin Hu, vice president of financial researchat Financial Engines. "Making a seemingly modest improvement in your monthly benefitcan add up to a lot and help to protect the retirement of your surviving spouse."

Changing your mind. If you decide to collect a reduced payment in your early 60s, thosesmaller payments typically last the rest of your life. But there are a few ways to undo yourearly claiming decision. If you signed up for Social Security in the past 12 months, you canrepay all the money you received, without interest, withdraw your Social Securityapplication, and then start payments again later at a higher rate. If you are between yourfull retirement age and age 70, you can suspend your Social Security payments goingforward. Suspending your benefit means you will earn delayed retirement credits that willresult in higher payments when you resume collecting from Social Security. However, theamount of the increase depends on your full retirement age. Those with a full retirementage of 66 could suspend payments for 4 years between ages 66 and 70, which wouldresult in a 32 percent increase in monthly payments when benefits are resumed at age 70.Those with a full retirement age of 67 are only eligible to suspend payments for threeyears and would get 24 percent more by stopping payments from age 67 to 70.

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10 Social Security Claiming Strategies That Work

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Boost your benefit.Your Social Security payment amount is determined by how much you earn while working and when you elect tostart receiving payments. Married individuals are additionally eligible for spousal and survivor’s payments. Butthere are many strategies you can use to increase how much you will receive in retirement. Here’s how to get thehighest Social Security payment you qualify for.Work 35 or more years.

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Work 35 or more years.Your Social Security payments are calculated using your 35 highest-earning years in the workforce. If you don’twork for at least 35 years, zeros are factored into the calculation and reduce your payments. Even a low-earningyear is better than having a zero averaged in.Earn a higher salary.



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Earn a higher salary.The more you earn and pay into Social Security up to the taxable maximum of $118,500 in 2016, the higher yourretirement payments will be. Earnings above the taxable maximum are not subject to Social Security taxes orused to calculate your benefit. Working an extra year, even after you retire, could increase your future paymentsif you now earn more than you did earlier in your career.Don’t claim before your full retirement age.

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Don’t claim before your full retirement age.Social Security monthly benefits are reduced if you start payments before your full retirement age, which is 66for most baby boomers and 67 for everyone born in 1960 or later. Workers who sign up at age 62 will get 25percent smaller monthly payments if their full retirement age is 66 and a 30 percent benefit reduction if their fullretirement age is 67.Consider delaying claiming until age 70.

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Consider delaying claiming until age 70.If you delay claiming Social Security past your full retirement age you will accrue delayed retirement credits thatwill increase your monthly payments by 8 percent for each year of delay. After age 70 there is no additionalincentive to delay starting your payments.Suspend payments.

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Suspend payments.If you took a reduced Social Security benefit, it’s not too late to boost your payments. Social Securitybeneficiaries who are between full retirement age and age 70 can suspend Social Security payments and earndelayed retirement credits. This will increase your benefit by 8 percent for each year of suspension up until age70, or as much as 32 percent if you suspend your payments for four years.Pay back your benefit.

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Pay back your benefit.If you change your mind within 12 months of signing up for Social Security, you can repay all the money you andyour family have received, without interest, and withdraw your Social Security application. You can then apply forSocial Security payments again at a later date, and the monthly payments will then be larger due to delayedclaiming. However, each beneficiary can only use this option once.Claim spousal payments.



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Claim spousal payments.Married individuals are eligible to claim Social Security payments worth up to 50 percent of their spouse’sbenefit, if that amount is higher than their own payment. To get the full 50 percent you need to sign up forspousal payments at your full retirement age, which is 66 for most baby boomers. Spousal payments arereduced if you claim them before your full retirement age. Ex-spouse’s are also eligible for spousal payments ifthe marriage lasted at least ten years.Include family members.

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Include family members.The children of retired and disabled Social Security beneficiaries can qualify for payments until they turn age 18(or 19 while a full-time high school student). The spouse of a Social Security beneficiary who is caring for adependent child under age 16 or a disabled child could also qualify for payments.Maximize survivor’s payments.



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Maximize survivor’s payments.When one member of a retired married couple passes away, the surviving spouse can inherit the deceasedspouse’s Social Security payment, if that amount is higher than his or her current monthly payment. Marriedcouples can increase the Social Security benefit the surviving spouse will receive by having the higher earnerdelay claiming Social Security.Estimate your longevity.



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Estimate your longevity.The most effective Social Security claiming strategy for you depends on how long you will live. If you have amajor health problem, it can make sense to claim benefits as soon as possible (unless you want to leave a higherbenefit to a surviving spouse). If you’re healthy and have parents who lived into their 90s, there’s a case to bemade for delaying claiming your benefit in order to receive a higher Social Security payment in your 70s, 80s andbeyond.Read More

Emily Brandon is the senior editor for Retirement at U.S. News. She has been writingabout retirement and aging issues for over a decade. Her best retirement tips arecollected in the new book “Pensionless: The 10-Step Solution for a Stress-FreeRetirement”. You can contact her on Twitter, circle her on Google+ or email her [email protected].

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