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Significance of FRA
Old 12-12-2017, 06:21 AM   #1
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Significance of FRA

Question for the gang at large: What is the significance of FRA? You can get SS at any age between 62 and 70. Why is a certain age (67 for me) considered FRA? I can start receiving SS at 66 year, 11 months or 67 years, 1 month or anytime between 62-70. I understand that you get less at 62 and it basically increases aprox 8%/yr up until 70. I get all that. I just don't understand why on age is called Full Retirement Age.
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Old 12-12-2017, 06:29 AM   #2
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From Ssa.gov https://www.ssa.gov/planners/retire/ageincrease.html
“Full retirement age (also called "normal retirement age")”

You get full benefit at the normal retirement age, but if you stick your hand in the cookie jar earlier, there are fewer cookies for you.
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Old 12-12-2017, 06:37 AM   #3
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Originally Posted by NgineER View Post
From Ssa.gov https://www.ssa.gov/planners/retire/ageincrease.html
“Full retirement age (also called "normal retirement age")”

You get full benefit at the normal retirement age, but if you stick your hand in the cookie jar earlier, there are fewer cookies for you.
Actually there are more cookies (# payments) but they are smaller ($ payments).
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Old 12-12-2017, 06:54 AM   #4
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The other difference is the that the discount for taking before FRA is lower than the premium for taking later than FRA.

If FRA is 66 then the discount for taking early varies but is ~20-30% for the 4 years... or on average 6 1/4%/year (it varies somewhatand the rate in the first 3 years differs from the earlier years).

OTOH, if you delay, the premium for waiting is 8% simple growth.... so if you wait 4 years then your age 70 benefit is 132% of your age 66 benefit.

See https://www.ssa.gov/oact/quickcalc/early_late.html and https://www.ssa.gov/oact/ProgData/ar_drc.html
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Old 12-12-2017, 07:06 AM   #5
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FRA is the basis for the SS calculations. You must first calculate how many $'s/month you get at FRA, then adjust that to the age you want to start getting SS. If you want SS to start earlier than FRA, you get less. If you want SS to start later than FRA, you get more.
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Very Helpful in Calculating SS benefit
Old 12-12-2017, 07:07 AM   #6
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Very Helpful in Calculating SS benefit

Quote:
Originally Posted by pb4uski View Post
The other difference is the that the discount for taking before FRA is lower than the premium for taking later than FRA.

If FRA is 66 then the discount for taking early varies but is ~20-30% for the 4 years... or on average 6 1/4%/year (it varies somewhatand the rate in the first 3 years differs from the earlier years).

OTOH, if you delay, the premium for waiting is 8% simple growth.... so if you wait 4 years then your age 70 benefit is 132% of your age 66 benefit.

See https://www.ssa.gov/oact/quickcalc/early_late.html and https://www.ssa.gov/oact/ProgData/ar_drc.html
The above is a great calculator for determining your Social Security benefit amount early.
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Old 12-12-2017, 07:09 AM   #7
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FRA is just a name, and an anchor for benefit amounts.


If they don't set the anchor somewhere they'd have to list the benefit amount for each month you start taking between 62 and 70. With a stated FRA age, they give the base benefit amount at FRA, and it's just a % adjustment up or down for taking early or late.
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Old 12-12-2017, 07:26 AM   #8
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Originally Posted by RunningBum View Post
FRA is just a name, and an anchor for benefit amounts.


If they don't set the anchor somewhere they'd have to list the benefit amount for each month you start taking between 62 and 70. With a stated FRA age, they give the base benefit amount at FRA, and it's just a % adjustment up or down for taking early or late.
Right. And, AFAIK the % up or down is the same for each age from the year before.
IOW (not sure of the exact percentage) 6% more at 63 than 62, 6% more at 65 than 64, 6% more at 68 than 67 etc. There is no particular jump up by waiting to FRA just another 6% from the year before your FRA.
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Old 12-12-2017, 07:30 AM   #9
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Originally Posted by NgineER View Post
From Ssa.gov https://www.ssa.gov/planners/retire/ageincrease.html
“Full retirement age (also called "normal retirement age")”

You get full benefit at the normal retirement age, but if you stick your hand in the cookie jar earlier, there are fewer cookies for you.
You said that (above quote) and I said this:

"I understand that you get less at 62 and it basically increases aprox 8%/yr up until 70."

Doesn't really answer the question since I already stated you get less at 62 and more at 70.
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Old 12-12-2017, 07:36 AM   #10
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Originally Posted by pb4uski View Post
The other difference is the that the discount for taking before FRA is lower than the premium for taking later than FRA.

If FRA is 66 then the discount for taking early varies but is ~20-30% for the 4 years... or on average 6 1/4%/year (it varies somewhatand the rate in the first 3 years differs from the earlier years).

OTOH, if you delay, the premium for waiting is 8% simple growth.... so if you wait 4 years then your age 70 benefit is 132% of your age 66 benefit.

See https://www.ssa.gov/oact/quickcalc/early_late.html and https://www.ssa.gov/oact/ProgData/ar_drc.html
Thanks. This is the best response and answers the question completely for me. I thought the pre FRA and post FRA %'s were the same. Didn't realize the bump up % after FRA was higher.
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Old 12-12-2017, 07:37 AM   #11
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In addition to being the base for calculating benefits, before FRA the benefits will be cut (effectively postponed) if you have substantial wage income. After FRA you can take SS regardless whether you still work.
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Old 12-12-2017, 07:41 AM   #12
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Quote:
Originally Posted by marko View Post
Right. And, AFAIK the % up or down is the same for each age from the year before.
IOW (not sure of the exact percentage) 6% more at 63 than 62, 6% more at 65 than 64, 6% more at 68 than 67 etc. There is no particular jump up by waiting to FRA just another 6% from the year before your FRA.
No, that's wrong. See post #4.
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Old 12-12-2017, 09:28 AM   #13
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One other minor point...
Until 2016 (when rules were changed), spouse 1 could file and suspend at FRA (but not prior to), allowing spouse 2 to draw spousal benefit. Then, spouse 2 could delay filing until maximum payout was attained. Until late 2016, FRA had real significance for many couples.
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