The age at which you can claim Social Security at the full retirement age is increasing. This year, in 2017, those turning 62 will be able to claim full retirement benefits at 66 and 2 months. And every year after 2017 the full retirement age increases by 2 months per year all the way up to 2022 when it caps out at age 67.

Here’s the breakdown:

Year Born – 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 – 67

You can claim benefits as early as 62 and as late as 70 and anywhere in between. The only thing is, depending on the year in which you were born, your full retirement age shifts up.

Survivor benefits are handled differently. The increase for full retirement age for survivor benefits is phased in starting in 2019 and going through 2024 for those turning 62. So, survivor benefits are actually shifted out on the phase-in period.

This has the effect of reducing your benefits slightly. Since there is a greater timeframe between age 62 and your full retirement age, the amount you’ll receive at age 62 is even less than your friends born 1954 and prior. And since there is less time between your full retirement age and age 70, you’ll get less for for delaying your retirement. The increase you’d get if you waited until age 70 isn’t as great as your peers born before 1955.

Not Bad For You, Bad For Survivors

This Social Security adjustment isn’t all that bad because those affected are actually going to be living longer anyway. So, while at first this may seem unfair, it’s simply the actuaries way of adjusting benefits based on your longer life expectancy. You’ll end up getting about the same amount of lifetime benefits discounted back to present value as your older peers.

One thing that sticks out as unfair, however, is the reduced benefit for widowers (survivor benefits). Survivor benefits are calculated differently than regular benefits and this phase-in reduction actually does reduce the benefit of waiting to file. The SSA hasn’t actually reduced the amount they’re paying survivors – it’s just that the raising of the full retirement age acts as a reduction in benefits.

Your surviving spouse / widow can get full benefits at full retirement age. The full retirement age for survivors is age 66 for people born in 1945-1956. And the full retirement age will gradually increase to age 67 as stated earlier. Your widow or widower can get reduced benefits at age 60. If your surviving spouse is disabled, benefits can begin as early as age 50. Your children may also get benefits based on your earnings record; think vulnerable children in this case. Those children who are under 18 and unmarried, disabled children, etc.

There are a bunch of different ways people (of all ages) can receive survivor benefits. Check out the SSA’s Survivors Planner webpage for more information.

Age 62 Example

Congrats, you’re 62. You’ve schlepped and grinded everyday for over 30 years and now you’re ready for early retirement (relatively early; not Mr. Money Mustache early).

But wait, you were born in 1955, so you can claim Social Security at 62 but it will be a reduced benefit (similar to your older peers).

You decide to figure out the best way to claim Social Security and have it work together with your other assets during retirement…some may call this optimizing your retirement.

You see that based on your earnings history, your Social Security benefit amount is going to be $1,500 at age 62. It’s lower than what you need to survive. You were hoping that your Social Security income would be over $2,000. You ponder staying at work…not sure of what to do.

You come to the realization that you won’t be able to survive on Social Security alone. You’ll need a retirement income strategy.

The first thing you do is figure out how much you need to retire. You download this spreadsheet that shows you exactly how much money as a lump sum you’ll need to retire.

Based on the assumptions you put into the spreadsheet, you realize that you have enough to retire.

Now you figure out that by withdrawing from both your 401(k) and your Roth IRA from ages 62 through 66 and 2 months, you’ll be able to increase your Social Security benefit by delaying it.

And the great news is, both your 401(k) and Roth IRA balances will stay about the same while you withdraw money because the money is well diversified in a Triad Portfolio.

Then your Social Security check at age 66 and 2 months is over $2,000 month. Your withdrawal rate on your other accounts is reduced. You no longer need to withdraw as much because you’re receiving tax-advantaged Social Security income.

Because your withdrawal rate is reduced, the balances in your 401(k) (which is now in a traditional IRA) and Roth start to increase even though you’re taking money out every month. This is the magic of investment income!

This scenario is a very high-level view of how optimizing your retirement income works.

Don’t just file for Social Security without a retirement plan that involves structuring your income in an optimal way.

Why work if you don’t want to or have to? Just because you’re not ready to collect Social Security doesn’t mean there aren’t others ways produce income.

If you’re considering retirement but not sure how to structure your income, let me know. Are you wondering when you should file for Social Security? Are you unsure how much you’ll need to retire based on all of you income sources?