Social Security

The following chart shows the age at which you would qualify for "full retirement age" benefits from Social Security for various years of birth. Over the years, this age has crept up from age 65. The Social Security Administration periodically tweaks their formulas to extend the time period for which it can pay out.

Year of Birth

Social Security Full Retirement Age

1943-54

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

If your full age is 67, here is the estimated reduction in monthly benefits at other starting ages:

Starting Age

Reduction

62

30%

63

25%

64

20%

65

13.3%

66

6.7%

Many people are concerned that Social Security may not exist by the time they apply for benefits. Our thinking is that there are too many people who depend upon Social Security in their retirement for the government to let it run out of money. We believe it will be around for the younger generation but the benefits may not be as great. For instance, the Administration may increase the full retirement age again, which means that either you have to wait to take your benefits, or your benefits are decreased further if you take your benefits before the full retirement age.  

The Administration could also simply raise taxes for more revenue, or institute a "means testing" whereby higher income individuals only receive a portion of their benefits. Any modifications to Social Security will likely have a negative impact on you. This will affect your cash flow and your retirement planning.

Our retirement projections and analysis include a discussion of these possibilities and often result in a lowering of expectations of Social Security benefits.  We also review various Social Security strategies (delay benefits, file and suspend, etc.) to see if they are appropriate and can improve for your situation.