What Is Normal Retirement Age?

Definition and Examples of Normal Retirement Ages

Older man having breakfast and reading the paper

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Normal retirement age is a standard term for the age when you can retire and receive your full retirement income. In the U.S., this mostly relates to your Social Security benefits.

Some people strike it rich enough to give up working before age 50. Others hang onto their working lives well into their 80s. Whatever your unique situation is, the Social Security Administration (SSA) defines available benefits by your age.

What Is Normal Retirement Age?

In most cases, if you have been working, you have been paying a portion of your income into Social Security. This is to guarantee an income when you are no longer able to work. To get that full income, you must wait until your normal retirement age (NRA) to start taking your benefits.

The SSA sets your NRA based on when you were born. It can range from people born in 1937 or before who have a full retirement age of 65, to people born between Jan. 2, 1943 and Jan. 1, 1955, who get full benefits at age 66. Those born in 1960 or later must wait until they turn 67.

  • Acronym: NRA
  • Alternate Name: Full retirement age

Here are the NRAs based on date of birth, as listed on the Social Security website:

Birth Year Normal Retirement Age
1937 and earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-54 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67
People born on Jan. 1 should use the prior birth year to find their normal retirement age.

How Normal Retirement Age Affects Your Benefits

Your NRA determines how much of your available benefits you can draw depending on when you apply for Social Security. If you begin taking Social Security benefits before you reach normal retirement age, your benefits will be reduced. If you delay your retirement past your NRA, your benefits will increase until you reach age 70.

As the system stands, anyone can start drawing Social Security benefits at age 62 or later regardless of normal retirement age. But monthly payments are permanently reduced for early retirees based on how far they are from normal retirement age when they start drawing funds. Those who start at age 62 could see benefits cut by as much as 30%, based on SSA guidelines.

Those who wait until after their normal retirement age to draw benefits can earn permanent higher monthly payments. The years waited translate into "delayed retirement credits," which can really boost income for you and a surviving spouse. You can weigh the potential effect of different starting ages by going to the Social Security website.

Working Before Normal Retirement Age

You can also lose some of your benefits if you work while receiving Social Security. This penalty is steeper if you have not reached your normal retirement age.

For 2021, you will lose $1 in benefits for every $2 in wages you earn over $18,960 per year until the month you reach the NRA. If you wait to take benefits until your NRA but still work, Uncle Sam will take $1 for every $3 in wages earned in excess of $50,520.

To make the most of your Social Security benefits, look at your retirement age and that of your spouse. Create a plan that makes the most sense for the long term.

Other Aspects of the Normal Retirement Age

The concept of normal retirement age also applies to pension plans. According to IRS rules and regulations, a pension plan may pay benefits to someone age 62 or older, even if they are not separated from employment.

For qualified benefit plans, unless you elect otherwise, benefits must begin within 60 days after the end of the last plan year in which you do one of the following:

  1. Turn 65 (or sooner if the plan has an earlier retirement age)
  2. Be active in the plan for 10 years
  3. End service with your employer

Also pay attention to age 59 1/2, That is the standard age when you can take penalty-free withdrawals from tax-advantaged accounts such as 401(k)s and IRAs. If you are already retired, you can also take penalty-free withdrawals from a 401(k) plan at age 55 if you stopped working for the employer that holds your plan. Note that these are still taxable income.

The formal definition of "normal" retirement age really applies to when and how you can access various types of retirement accounts. Each person has their own definition. In 2015, the average retirement age was 64 for men and 62 for women. What you define as normal may vary. It comes down to when you are ready and what your retirement goals are.

Key Takeaways

  • Normal retirement age is the age when you can retire and draw full Social Security benefits.
  • It ranges between age 65 and 67, depending on when you were born.
  • Retiring before or after your NRA will reduce or increase your monthly benefit.
  • Concepts similar to normal retirement age also affect your ability to take benefits from a pension or qualified retirement plan.