If I Could Tell All Retirees 1 Thing About Social Security, I'd Say to Do This Before You Claim Benefits

For many older adults, Social Security can make or break retirement. According to a 2024 Gallup poll, a staggering 83% of workers expect to rely on their benefits to some degree in retirement, with more than one-third of that group saying Social Security will be a "major" source of income.

It's wise, then, to make sure you're maximizing your monthly payments. While many factors will influence your benefit amount, there's one aspect of Social Security that the vast majority of older adults misunderstand: full retirement age.

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Most older adults get this one simple question incorrect

Can you name your true full retirement age? If not, you're in good company -- neither can 85% of U.S. adults, according to a 2024 survey from the Nationwide Retirement Institute.

Your full retirement age (FRA) is the age at which you'll receive 100% of the benefit you've earned due to your income and work history. This figure will depend on your birth year, but it's between ages 66 and 67 for everyone. Those born in 1960 or later have an FRA of 67.

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However, the average baby boomer believes their FRA is 64 years old, according to the Nationwide survey. The average guess from survey participants across all age groups was 61 years old -- even though the earliest you can begin claiming Social Security is age 62.

Not knowing your FRA could seriously hurt your finances

Incorrectly guessing your FRA may seem like a small issue. However, it could throw a major wrench in your retirement plans.

For example, say your real FRA is 67 years old, but you mistakenly believe it's age 64. Three years is not necessarily a lot of time, but every month you file before your FRA will reduce your checks. In this case, filing three years early will slash your payments by 20% per month.

The average retiree collects around $1,925 per month from Social Security as of November 2024. So, if you collect $1,900 per month at your FRA but file at 64 expecting to receive this amount, it could come as a shock when you only receive $1,520 per month after the 20% cut. For those relying heavily on their benefits, that $380 monthly reduction can sting.

Keep in mind, too, that these reductions are permanent. If you file before your FRA, you'll receive smaller checks every single month for the rest of your life. That makes it even more important to know your true FRA because even a small misjudgment could cost you for decades to come.

What's the best age to take Social Security?

Knowing your FRA is perhaps the single most important factor to know before you begin claiming. Not only will it help you plan your finances more accurately, but it can also make it easier to decide at what age you want to take Social Security.

You don't necessarily need to wait until your FRA to file for benefits; in some cases, you could be better off filing early. If your primary goal is to retire early, for instance, sometimes the monthly reduction you'll face by claiming before your FRA is a worthwhile trade-off for the opportunity to spend more time in retirement.

On the other hand, waiting a few years to take Social Security can help maximize your monthly income. If you have an FRA of 67, delaying up to age 70 will earn you a bonus of 24% on top of your full benefit. This could boost your monthly income by hundreds of dollars, which could go a long way if your savings are falling short.

There's no single correct time to start Social Security, as it will depend on your personal situation. But before you make any decisions, it's crucial to know your FRA and how your age will affect your benefit amount.

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