Social security benefits are for workers 62 and older who have earned at least 40 credits. The size of your benefit checks depends on your average indexed monthly earnings (AIME) over your 35 highest-earning years and the age at which you begin benefits.
There are three main types of Social Security benefits: retirement benefits, disability benefits, and survivors benefits.
You must wait until your full retirement age (FRA) to claim your standard benefit based on your AIME. Your FRA is 66 if you were born between 1943 and 1954, then it rises by two months every year thereafter until it reaches 67 for those born in 1960 or later.
Based on data by the Social Security Administration, here is a chart showing the actual retirement age based on the applicant’s year of birth.
|
Year of Birth |
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 or later |
67 |
Full retirement age (FRA) is the age at which you can claim your standard Social Security benefit, or your primary insurance amount (PIA), from Social Security. Your PIA is the standard amount you can expect to receive based on your inflation-adjusted average wages earned throughout your career.
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Full retirement age is 66 for those born in 1954 and 67 for those born in 1960 or later — it varies depending on your birth year.
It is important to know your full retirement age, as it affects when you can claim Social Security without reducing your benefits, the amount of delayed retirement credits you can earn to raise your benefits, and how much you can earn from working while receiving Social Security without forfeiting any of your benefits.
According to an article by The Motley Fool, if you continue to work after reaching full retirement age, you may work and earn as much as you’d like. You will not be subject to the retirement earnings test, and your Social Security benefits will not be affected.
If you work before FRA, you may forfeit part of your benefits if you earn above annual thresholds. However, your benefit amount will be recalculated at full retirement age to account for most of those forfeited funds.
Working after full retirement age could increase your Social Security benefits. Your benefits are based on average wages over your 35 highest-earning years (adjusted for inflation).
Even after you’ve reached full retirement age, and even if you’ve already claimed benefits, the Social Security Administration continues to recalculate your average annual wage to account for new income.
If your earnings after FRA are higher than previous years and raise your average wage for your 35 top-earning years, your benefits could rise accordingly.