Are Social Security Benefits Changing In 2021?

Birth year 1960 and thereafter
– FRA is age 67
– minimum benefit is 70% of PIA (60 months of reduction)
– maximum benefit is 124% of PIA (36 months of delay increase)

Practical Application of the Rules for YOUR Situation

Perhaps it might help to visualize a timeline of the 96 months between age 62 and age 70. For folks born between 1943 and 1954, the FRA point is at age 66. At that point, there are 48 months to the left of FRA (maximum number of months before FRA that you can file, therefore 48 months worth of reductions can be applied). On the right of FRA, there are 48 months before age 70, so that there are a maximum of 48 months’ worth of increases by delaying. See below:

FRA 66 timeline

However, for someone born in 1955, the FRA point is at 66 years and two months. This leaves 50 months to the left, and 46 months to the right. So the decreases are greater at the minimum filing age, and the increases are less at the maximum filing age. See below:

FRA 66y 2m timeline

Since increases and decreases are based on how many months before or after FRA that you file when there are more months to the left the maximum decrease will be greater. Likewise, when there are fewer months to the right the increases will (at maximum) be less.

To calculate the minimum benefit for 1955 birth year, as indicated above there are 50 months of possible reductions. The closest 36 months determine a 20% decrease, and the remaining 14 months (at 5/12% per month) determine an additional 5.83% decrease, multiplying 14 by 5/12%. Adding these two together we come up with 25.83%, so the minimum benefit is 74.17% for birth year 1955.

Calculating the maximum benefit amount for 1955 birth year is more straightforward – every month of delay produces a 2/3% increase. Multiplying 2/3% by the 46 possible months of increase results in a total maximum increase of 30.67% for birth year 1955.

Nothing is Changing in 2021

If you’re reaching FRA in 2021, these factors have applied to every calculation done to project your benefits. NOTHING CHANGES AS OF 2021, it’s already in place (since 1983), determined by your year of birth. So again I say, the year 2021 should have no impact on your filing decisions.

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