From Retirement Now Newsletter July 8th 2021

I had a chance to discuss some of the important fundamentals of Social Security with Keith Armbrecht on his YouTube channel recently. You can check it out by clicking here.

FYI: He specializes in Medicare and has a treasure chest of videos on his channel to answer just about any Medicare question you could imagine. Check it out here if you’re interested.

But in this email I wanted to discuss one big impact caused by the raising of Social Security’s full retirement age has had.

Just so you know, the full retirement age used to be 65. Then it was increased to 66. And it is in the process of increasing up to age 67. In fact, if your year of birth is in the years 1955-1959, you are in the transition group whose full retirement age is increased incrementally by 2 months. (For 1955 it’s 66 yrs and 2 months. For 1956 it’s 66 yrs and 4 months. Etc…)

Everyone born in 1960 and thereafter will have a full retirement age of 67.

At least that’s the current rules.

But one of the big impacts of this change is how it affects early drawing AND later drawing.

The early drawing I discuss in the video.

If your full retirement age is later, say 67, then there’s 5 years difference between being first eligible to draw at 62 and your full retirement age at 67. If you then draw at 62 you have a bigger reduction in benefits compared to the person whose full retirement age was only 66.

But it works in the other direction too.

A person whose full retirement age is 66 could delay 4 years up until age 70 to get a bigger benefit. And each of those years would add an 8% increase to their benefit. Thus a total of 32% increase in Social Security benefits for delaying until age 70.

But for the person whose full retirement age is 67, they will only have 3 years of 8% increase by delaying until age 70. Thus only a 24% increase in benefits for delaying until 70.

Will this difference make a huge impact on people?

That depends on each individual’s situation. But probably not a catastrophic impact on their retirement.

But it does go to show that the retirement landscape has changed and probably will continue to change.

Which makes it all the more important to

-Stay on top of these changes

-Use proper retirement investing techniques to help improve the income your portfolio can generate for you in retirement

-Take steps to assess your portfolio’s “tax risk” if Congress raises rates and

-Find ways to reduce or eliminate that tax risk over time

If you start addressing just those issues, you’ll be ahead of the pack. And if you need help with your retirement on those issues or any others, feel free to jump on this link and choose a time that works for you and we’ll have a 20 minute chat. I’ll point you in the right direction.


Chris Hammond