Full Retirement Age Raises to 67 for Those Born in 1960 or Later – Here’s How to Reduce Your Benefits

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Full Retirement Age Raises to 67 for Those Born in 1960 or Later – Here’s How to Reduce Your Benefits

An unhappy elderly woman sits together with her husband – Shutterstock

Millions of Americans approaching retirement are now facing a Social Security milestone that could permanently affect the size of their monthly checks. Starting in 2026, the full legal retirement age will reach 67 for people born in 1960 or later, ending a decades-long expansion that began back in the 1980s. Many workers still think that age 65 or 66 is when they’re eligible for full Social Security benefits, only to find that they can face big cuts if they claim too early. Here’s a look at how filing early can reduce your benefits.

The Full Retirement Age is Now Legal for 67 Million Americans

For anyone born in 1960 or later, Social Security now considers age 67 to be the official retirement age, often referred to as FRA. This means that beneficiaries must wait until 67 to receive 100% of their earned retirement benefit without reduction. The gradual increase from age 65 to 67 began after Congress passed reforms designed to address longevity and financial strain on the Social Security system.

In previous years, people born in 1959 had a full retirement age of 66 and 10 months, but the latest increase is now taking effect for younger retirees. Many Americans approaching retirement now realize that filing before age 67 can reduce their monthly paychecks for the rest of their lives.

Claiming at 62 Can Permanently Reduce Your Benefits by 30%

Although workers can still start claiming Social Security benefits at age 62, the financial trade-off has become more difficult now that the full retirement age is 67. According to the Social Security Administration, a person born in 1960 or later who files at 62 can only receive about 70% of their total retirement benefit. That reduction is permanent for the rest of your life, meaning smaller monthly checks not only now but during retirement.

For example, a worker who is eligible for $2,200 per month at age 67 could receive closer to $1,540 per month if they claim it at 62 instead. In 20 years of retirement, that difference could add up to tens of thousands of dollars in lost earnings.

Waiting Longer May Increase Monthly Payments Significantly

Although filing early reduces benefits, delaying retirement past full retirement age can significantly increase monthly Social Security payments. Beneficiaries born in 1960 or later receive delayed retirement credits that increase benefits by about 8% annually until age 70. Someone who is eligible for $4,152 monthly at full retirement age in 2026 could increase that payment to about $5,181 by waiting until age 70.

For retirees with strong health, longer life expectancy, or more retirement savings, delaying benefits can create long-term financial stability. However, many workers still post early because of layoffs, health issues, caregiving responsibilities, or concerns about the future of Social Security.

Working While Claiming Early Benefits May Cause Additional Deductions

Many Americans think they can claim Social Security early and continue working without consequences, but income tests can temporarily reduce benefits before full retirement age. In 2026, FRA beneficiaries who earn above certain income limits may have a portion of their benefits withheld from Social Security.

The minimum wage for workers under full retirement age is expected to rise to about $24,480, while those who reach the FRA in 2026 could earn about $65,160 before the withholding rules take effect. A part-time retiree at age 63, for example, may face reduced monthly checks if his work income exceeds those limits. Although withheld benefits are later recalculated, many retirees are shocked to see smaller payments while they continue to work.

Future Social Security Changes May Make Retirement Planning Even More Difficult

The move to a full retirement age of 67 may not be the last change Americans see in the coming years. Policymakers continue to debate more reforms as the Social Security fund faces financial pressure over the next decade. Other proposals discussed in Washington include raising the retirement age even higher, adjusting benefit formulas, or adjusting payroll taxes to bolster the program’s finances.

The ongoing negotiations are already causing concern among older workers, some Americans who are seeking benefits early because they fear future cuts could reduce pay later. Financial planners increasingly recommend reviewing retirement income plans a few years before applying because Social Security decisions now have bigger long-term consequences than most people realize.

Applying Early May Cost More Than You Think

The shift to a full retirement age of 67 marks one of the most significant Social Security changes facing today’s retirees. Although workers still have the option of claiming benefits before age 62, doing so now results in a larger permanent reduction than most Americans expect. At the same time, delaying benefits can significantly increase monthly income for retirees who can’t wait. Each person’s situation is different, especially when life circumstances, work, caregiving responsibilities, and savings levels come into the equation. Ultimately, it’s up to you how you approach claiming your benefits, but you should go into that decision knowingly.

Do you think the full retirement age should remain at 67, even if lawmakers consider raising it again in the future? Share your thoughts in the comments below.