For years, retirement age has been established and firm, but that all changed once modern medicine started to lengthen our lifespan and the Social Security Administration could no longer afford to pay out so many retirement benefits and for that long. But while that is a good thing overall, the drop in mortality is always good news, it was also troubling for many workers who now had to wait for longer to retire.
The process was slow and steady, and in the beginning the increase was slow and steady until full retirement age reached 66 years old. However, this did not solve the entire issue, and lawmakers decided to continue to make it creep up until full retirement age sat at 67. To make it fair, this was done by birth year, so that those who are closer to retirement only have to delay their plans by a couple of months and not a full year, which after having worked for upwards of 35 years in some cases can sound quite insulting.
Full retirement age, Social Security’s way to compensate you for a life of work
Because the increase has been so gradual and it has been focused on changing the age at which one is able to access their full pension, retirement in the US still has some quirks that beneficiaries can take advantage of depending on their circumstances.
For example, since the original age to obtain a full pension was 65 and most people would have theoretically waited to retire at that age and thus lost their company sponsored medical insurance, 65 was also the age at which you were eligible for Medicare. This has not changed, and even today once you turn 65 you are eligible to take advantage of Medicare plans instead of having to pay your employer or have no medical insurance whatsoever.
Another quirk is that the age at which you can choose to retire and start receiving benefits, even if it is not a full pension, has not changed and remains at 62. Most people that choose to retire at 62 do so because of health issues or other problems like needing to be a caregiver for a family member, it is not the usual age to choose to retire. And there is a very good reason for that, you will lose 30% of your benefits permanently by not waiting. Although full retirement age has increased, the percentage of benefits that you lose by retiring early has not increased, so if you really need to stop working, it might not be the best option, but it is not the worst.
Now with the increase to full retirement age being officially set at 67 years old, those who were born after 1960 will officially have to wait the full year, but for those born prior to that date, full retirement age looks like this:
- Those who were born between 1943-1954 will be eligible for full benefits at 66 years old
- Those who were born in 1955 will be eligible for full benefits at 66 and two months
- Those who were born in 1956 will be eligible for full benefits at 66 and four months
- Those who were born in 1957 will be eligible for full benefits at 66 and six months
- Those who were born in 1958 will be eligible for full benefits at 66 and eight months
- Those who were born in 1959 will be eligible for full benefits at 66 and 10 months
- And last, those who were born in 1960 and later will be eligible for full benefits at 67 years old
There have been rumors about continuing to increase full retirement age to 69 years old, but the measure was so deeply unpopular that, for now, lawmakers have decided to maintain status quo a little longer.