What full retirement age means
Full retirement age, or FRA, is the age at which Social Security pays 100% of your primary insurance amount, the benefit calculated from your 35 highest-earning years. It is not 65, and it has not been for a long time. Anyone born from 1943 through 1954 has an FRA of 66. From 1955 the age rises by two months per birth year: 66 and 2 months for 1955, 66 and 4 months for 1956, 66 and 6 months for 1957, 66 and 8 months for 1958, and 66 and 10 months for 1959. Everyone born in 1960 or later has an FRA of 67. One quirk catches people out: if you were born on January 1, the Social Security Administration uses the previous year's rule.
Medicare is separate and still starts at 65 for everyone, which is why so many people believe 65 is the retirement age. If you claim Social Security before 65 you are enrolled in Medicare automatically at 65; otherwise you have to sign up during your initial enrollment window or risk a lifelong late penalty.
The cost of claiming early and the reward for waiting
You can start benefits as early as 62, but the reduction is permanent. The formula takes 5/9 of 1% per month, about 0.5556%, for each of the first 36 months before FRA, and 5/12 of 1%, about 0.4167%, for every month beyond that. With an FRA of 67, claiming at 62 is 60 months early: 36 months cost 20% and the remaining 24 months cost another 10%, so you receive 70% of your full benefit for life. With an FRA of 66 the same 62 claim is 48 months early and costs 25%, leaving 75%.
Waiting past FRA earns delayed retirement credits of 8% a year, accrued at 2/3 of 1% per month, and they stop at 70. With an FRA of 67 that is three years of credits, so age 70 pays 124% of the full benefit. With an FRA of 66 it is four years and 132%. Worked example: someone born June 15, 1965 has an FRA of 67, reached on June 15, 2032. On a full benefit of $2,000 a month, claiming at 62 in June 2027 pays $1,400, FRA pays $2,000, and waiting to June 2035 pays $2,480 a month, a 77% increase over the age-62 amount.
Other things that affect the decision
If you claim before FRA and keep working, the earnings test temporarily withholds $1 of benefits for every $2 earned above an annual limit, with a more generous formula in the year you reach FRA; the withheld amounts are added back later through a recalculation. Benefits can also be partly taxable once your combined income passes modest thresholds. Spousal benefits are based on the worker's FRA amount and do not earn delayed credits, while survivor benefits do reflect the delay, which is the strongest argument for the higher earner in a couple to wait. Health, other savings and whether you need the income now all matter more than any break-even year.