Retirement marks a big turning point in anyone’s working life—a shift from years on the job to a period of relaxation and fun. But figuring out the right time to retire and how to get the most out of your benefits can be a bit of a maze. Traditionally, most people have retired around 65, which lines up with when they’re eligible for Social Security benefits. Still, with people living longer, laws and recommendations around retirement have changed, affecting millions of Americans.
Changing laws on retirement age
Back in 1983, lawmakers put in place a plan to gradually raise the retirement age (this was because people were living longer). The idea was to keep Social Security funds stable by having folks work a few extra years. Now that life spans are getting longer, this tweak helps keep the system balanced with what retirees need.
The concept of Full Retirement Age (FRA) is a key factor in knowing when you can tap into your full Social Security benefits. For instance, if you were born in 1959, you’ll reach FRA at 66 years and ten months by 2025. It’s important to know your FRA since claiming benefits earlier means you’ll get less money each month. To give you a clearer picture: those born in 1958 have an FRA of 66 years and eight months, while anyone born in 1960 or later will hit their full benefit age at 67 years.
Early claims vs. waiting for more benefits
You can start claiming Social Security benefits at 62, but doing so leads to a permanent drop in your monthly payments—up to 30% less than if you’d waited until reaching FRA. Many financial advisors suggest holding off on claiming until age 70 to really make the most of your benefits. Waiting past your FRA can add about 8% more to your yearly benefits, which could add up to a total boost of 32% by age 70.
Stephanie McCullough, the founder and financial planner at Sofia Financial, points out that planning ahead for retirement income is a smart move. She recommends keeping your fixed expenses—like housing, car payments, utilities, and regular bills—as low as possible. (This gives you more wiggle room for fun spending and helps you handle life’s surprises.) Her advice shows how cutting down on these steady costs can not only solidify your finances but also make your retirement years more enjoyable.
When it really makes sense to claim your benefits
McCullough also brings up the perks of waiting until age 70 to claim your benefits. A bigger monthly check right off the bat means your cost-of-living adjustments (since they’re based on the amount you get) will be higher over time. Also, if you’re married, waiting can mean higher survivor benefits for your spouse—a point that’s definitely worth considering when planning together.
In McCullough’s own words: “Waiting until 70 certainly has its benefits: a higher initial monthly payment…and one that people may overlook is higher survivor benefits for the surviving spouse.” This way, even if the higher-earning partner doesn’t make it far into retirement, the decision to wait can really help out the surviving spouse financially.
Sorting through retirement choices calls for thoughtful planning and looking at all the details. With the rules changing and individual situations varying widely, knowing when and how to claim Social Security benefits is a smart way to get the most out of your finances. Whether you’re planning for yourself or thinking about the family, staying on top of these shifts helps you make decisions that fit your long-term goals and lifestyle dreams.
