For many years now, Social Security has had some important changes. These changes include a yearly benefits boost if the consumer price index reveals costs are going up, as well as a raise in how much income will be subject to SS taxes.
In recent years, there was something else that changed as well — and it has affected when retirees are able to claim their standard SS benefits, as well as how much of their income Social Security will offer to them. This year will be the last time that this adjustment will happen, though, and it is important for every future and current retiree to realize what the implications are.
This Social Security rule will not have any more changes under the current law
In recent years, the full retirement age has been seeing some changes for recently eligible SS beneficiaries. However, this year is the last time that this will happen.
Now, if you’re not familiar with the rules of the Social Security benefits program, chances are you are not sure why this matters or what this means. If that is the case, here is what you should know:
- Retirees can first become eligible to receive Social Security benefits when they turn 62 years of age.
- If you Claim benefits at age 62, or any time prior to reaching FRA, it is considered an early benefits claim.
- Early claims will result in early filing penalties, which will reduce your monthly benefits. The penalties apply for each month benefits are claimed before FRA.
- Full retirement age can be determined based on birth year. It has gradually been moving higher thanks to amendments that have been made to Social Security in 1983.
Because FRA has been shifting older and older for recently eligible beneficiaries, every new group who has turned 62 recently will be made to wait a little while longer to begin Social Security checks if they want the standard payment. They will also have less opportunities to earn a delayed retirement credit, which can be earned until age 70 for every month you delayed claiming your benefits after FRA.
Everyone who is turning 62 in 2022 or after will have the same FRA.
So anyone that turns 62 this year or after, full retirement age will become 67. These seniors have to wait until they reach age 67 to avoid the early filing penalties. In contrast, those individuals that turned 62 last year can get their standard benefit check at age 66 and 10 months, while everyone that reached this milestone in 2020 was able to claim benefits at 66 and 8 months and not have to face penalties.
Now, there is a chance that Congress might make further changes to the Social Security benefits and shift FRA even later in the future. But unless that does happen, anyone who first becomes eligible for SS retirement benefits this year or later will no longer need to delay claiming their SS checks just to receive the full benefits they have earned during their lifetime of work.