A new year inevitably brings change – and not always for the better. The U.S. Social Security Administration has announced that it is changing its retirement age and monthly payment caps.
Effective January 2017, the retirement age to begin collecting Social Security has been increased to 67 for anyone born in 1960 or later. By changing the full retirement of Social Security, it reduces the length of time recipients can take payments, helping to secure Social Security and it also encourages older healthy Americans to continue working.
For those born in 1937 or earlier, full retirement for Social Security benefits is 65. Those born in 1938 must wait until they are 65 and two months, and for every birth year afterwards the person has to wait an extra two months. For those born between 1943 and 1954, the full Social Security retirement age is 66 and the two-month increase continues until people born in 1960 or later.
The age increase can affect a recipient’s monthly Social Security check for those opting to collect it early, since they are penalized with a reduced payment. The larger the time gap to reach full retirement age, the greater the reduction.
If collecting Social Security early at 62, a recipient can lose 20-35% of their payments. On the flip side, if the recipient waited to collect Social Security until the age of 70, the payments can be increased by 8% per year.
The age a person takes Social Security can also affect a spouse. If a retired worker takes Social Security at their full retirement age, the most their spouse can receive from their benefits is 50% at their full retirement age. If the recipient’s spouse claims Social Security earlier than their full retirement age those benefits will be reduced.
Benefits are not reduced if the spouse is caring for a qualifying child, one who is 16 or younger.
The Social Security Administration also announced an increase to its cap on monthly benefits to $2,687 and if a person continues to work while accepting social security, they can earn up to $16,920, an increase from $15,720 last year.
To see more about Social Security and how monthly benefit amounts can be projected, click here: