Social Security Full Retirement Age Rises

For the first time since 2005, the Social Security full retirement age (FRA) will rise in 2017. The increase's origin is legislation passed in 1983 that aimed to improve the solvency of the Social Security trust funds. FRA will rise by 2 months every year until it reaches 67 in 2022. FRA is the age a retiree will receive his/her "full" Social Security retirement benefits.

Here's a handy chart courtesy of Michael Kitces's blog: 

Retirees can still receive benefits on their own record as early as age 62. However, with FRA rising, that means that benefits taken at 62 will result in further reductions than before. A retiree who takes benefits before FRA has his/her benefits reduced based on the number of months until FRA. A 62-year old retiree today has two more months until FRA than a 62-year old retiree last year..

Similarly, the potential for increasing benefits above FRA has been lessened. A retiree who delays taking benefits past FRA receives a bump in benefits based on the number of months he/she waits. Delayed benefits no longer increase beyond 70. With FRA rising, there are fewer months until 70 that delaying retirees can receive a bump in benefits.

With Social Security trust funds remaining underfunded today, there will likely be future adjustments to reduce lifetime expected benefits. However, the 1983 legislation signals that workers near retirement are less likely to be affected. The laws passed three decades ago allowed anyone who was 45 or older to keep the FRA age of 65. The adjustments targeted younger workers. That will probably be the same formula proposed by a future Congress.