In most years, Social Security undergoes important changes. These include an annual benefits increase if a consumer price index shows costs going up, as well as an increase in how much income is subject to Social Security taxes.
In recent years, something else has changed as well – and it’s affected when retirees can claim their standard benefit, as well as how much income Social Security will provide to them. The 2022 year is the last time this adjustment will occur, though, and it’s important for every current and future retiree to realize the implications of that fact.
In recent years, full retirement age has been changing for newly-eligible Social Security beneficiaries. However, 2022 is the last time this will happen.
This Social Security rule won’t change again under the current law
Now, if you aren’t familiar with the intricacies of the retirement benefits program, chances are you aren’t certain what this means or why it matters. If that’s the case, here’s what you need to know:
- Retirees first become eligible for Social Security retirement benefits when they turn 62.
- Claiming benefits at 62, or any time before full retirement age, is considered an early claim.
- Early claims result in early filing penalties, which reduce monthly benefits. These penalties apply for every single month benefits are claimed prior to FRA.
- Full retirement age is determined based on birth year. It’s gradually been moving later thanks to amendments made to Social Security in 1983.
Because FRA has been shifting later and later for newly eligible beneficiaries, each new group who has turned 62 in recent years will be forced to wait a little longer to start Social Security checks if they want their standard payment. They’ll also have fewer opportunities to earn delayed retirement credits, which can be earned until 70 for each month you delay claiming benefits after FRA.
But this won’t continue forever. In fact, everyone who turns 62 in 2022 or beyond will have the same FRA.
How does this impact new retirees?
To understand the impact of the changes to full retirement age – and to see why it matters that these changes will no longer affect newly eligible beneficiaries – it’s helpful to take a look at some examples.
The table below shows exactly when FRA is based on birth year:
| Birth Year | Full Retirement Age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Data source: Social Security Administration
So for anyone who turns 62 in 2022 or beyond, full retirement age will be 67. These seniors must wait until then to avoid early filing penalties. By contrast, those who turned 62 last year could get their standard benefit at 66 and 10 months, while those who hit this milestone in 2020 were able to claim at 66 and 8 months and not face penalties.
Now, there’s a chance Congress could make further modifications to Social Security and shift FRA even later for future retirees. But unless that happens, anyone who who first becomes eligible for Social Security retirement benefits this year or in the future will no longer need to delay the start of their Social Security checks longer than their older peers just to get the full benefits they earned over their lifetime of work.