Full Retirement Age (FRA)

Full Retirement Age (FRA) is the specific age at which you are first eligible to receive your full, unreduced retirement benefits from government programs like the U.S. Social Security system. Think of it as the “official” retirement age designated by the government, not necessarily the age you personally choose to stop working. This age isn't a single number for everyone; it's on a sliding scale determined by your year of birth. For decades, the FRA in the United States was 65, but legislative changes have gradually pushed it to 67 for those born in 1960 or later. Understanding your personal FRA is a cornerstone of effective retirement planning. It's the baseline against which you measure the financial consequences of claiming your benefits earlier (which means a smaller monthly check for life) or later (which means a larger one). Mistaking your FRA can lead to significant miscalculations in your retirement income strategy, so it's a number every investor should know by heart.

On the surface, FRA might seem like just a government rule, but for an investor, it's a critical variable in your financial master plan. Your Social Security benefit is, in essence, a government-backed, inflation-adjusted annuity—a stream of income you receive for the rest of your life. The amount of that income stream is directly tied to when you decide to turn on the tap relative to your FRA. This decision has a direct ripple effect on your investment portfolio. A larger, delayed Social Security check means you'll need to withdraw less money from your personal accounts (like a 401(k) or IRA) to cover your living expenses. This reduced “withdrawal rate” puts less stress on your portfolio, giving it a better chance to weather market downturns and continue growing for longer. For investors, FRA is the pivot point in the great balancing act between guaranteed government income and market-dependent portfolio withdrawals.

Your FRA is set by law and depends on the year you were born. While the term is most common in the U.S., other countries have similar concepts (like the State Pension Age in the U.K.). For the U.S. system, administered by the Social Security Administration (SSA), the breakdown is straightforward.

• Born 1943-1954: Your FRA is 66.
• Born 1955: 66 and 2 months.
• Born 1956: 66 and 4 months.
• Born 1957: 66 and 6 months.
• Born 1958: 66 and 8 months.
• Born 1959: 66 and 10 months.
• Born 1960 or later: Your FRA is 67.

Knowing this date is the first step in making one of the most important financial decisions of your life.

You have a window of eight years to start claiming your Social Security benefits, from age 62 to 70. Each choice has a permanent impact on your monthly income.

You can start receiving checks as early as age 62, but there's a catch. Your monthly benefit will be permanently reduced. If your FRA is 67, claiming at 62 results in a benefit reduction of about 30%. You get money sooner, but the size of each check is smaller for life.

This is the baseline. If you wait until your FRA, you receive 100% of the benefit you've earned over your working career. No penalties, no bonuses.

This is where it gets interesting for savvy planners. For every year you delay claiming past your FRA, your benefit automatically increases by about 8%. These are called Delayed Retirement Credits. This bonus stops accumulating at age 70, so there is no financial benefit to waiting any longer. Delaying from an FRA of 67 to age 70 results in a monthly check that's 24% larger than your full benefit—for the rest of your life.

People often wonder about the “break-even” point—the age at which the total amount received from delaying overtakes the total received from claiming early. Example: Imagine your full benefit at an FRA of 67 is $2,000/month.

• Claiming at 62: Your benefit is reduced by 30% to $1,400/month.
• Claiming at 70: Your benefit is increased by 24% to $2,480/month.

By waiting from 62 to 70, you're forgoing 8 years of payments ($1,400 x 96 months = $134,400). But once you start claiming at 70, you get an extra $1,080 each month ($2,480 - $1,400). To find the break-even point, you divide the forgone income by the extra monthly benefit: $134,400 / $1,080 = 124.4 months, or about 10.4 years. This means you would need to live past age 80.4 for the decision to delay to pay off in pure dollar terms. However, this simple math ignores health, lifestyle, and a huge factor: inflation. All Social Security benefits are adjusted for inflation via a Cost-of-Living Adjustment (COLA), meaning the higher base you lock in by delaying grows even more over time.

A value investor seeks high-quality assets at a reasonable price. The decision of when to claim Social Security should be viewed through this very lens. Delaying your benefits is like purchasing a risk-free, inflation-protected investment with an incredible return. The 8% annual “return” you get from Delayed Retirement Credits is guaranteed by the U.S. government. Finding a bond or any other investment that offers a guaranteed 8% return, let alone one that also adjusts for inflation, is virtually impossible in today's market. Furthermore, value investors are obsessed with managing risk. One of the biggest risks in retirement is “longevity risk”—the danger of outliving your money. Maximizing your Social Security benefit by delaying until age 70 is a powerful form of longevity insurance. It provides the largest possible guaranteed income stream, protecting you financially in your 80s, 90s, and beyond. While you could take the money early and invest it, you would be trading a guaranteed outcome for a speculative one. For a value investor who prizes certainty and a margin of safety, the high, risk-free, inflation-adjusted return of delaying Social Security is one of the best deals around.