retirement-at-65-high-earner-analysis

Profile:

• Current Age: 41 (Born ~1984)
• Years Earning $100k+: 15+ years
• Total Work History: 25+ years (since age 16)
• Target Retirement Age: 65
• Full Retirement Age (FRA): 67

Executive Summary

For someone born in 1984 or later, age 67 is the full retirement age, not 65. Claiming benefits at age 65 results in a permanent 13.3% reduction in monthly benefits.

Expected Monthly Benefit at Age 65:

• Estimated Range: 3,484/month
• Annual: 41,808/year
• Maximum Possible (2025 dollars): $3,484/month

This represents 86.7% of your full retirement age benefit.

Understanding Full Retirement Age (FRA)

Birth Year Matters

Since you were born around 1984, your FRA is age 67 (year 2051).

Claiming Age Impact on Benefits

Reduction for Early Claiming

If you claim at age 65 (24 months before your FRA of 67):

• Reduction: 13.3% permanent decrease
• Benefit Percentage: 86.7% of full benefit
• Calculation: 24 months × (5/9 of 1% per month) = 13.33%

Claiming Age Comparison

How Benefits Are Calculated

Step 1: Calculate AIME (Average Indexed Monthly Earnings)

1. Social Security takes your highest 35 years of earnings
2. Each year’s earnings are indexed for wage growth
3. The 35 highest indexed years are averaged
4. Divide by 420 months to get AIME

Step 2: Apply Bend Points to Calculate PIA (Primary Insurance Amount)

2025 Bend Points: 7,391

The formula applies progressive replacement rates:

1. 90% of the first $1,226 of AIME
2. 32% of AIME between 7,391
3. 15% of AIME above $7,391

Example Calculation for High Earner:

If your AIME is 100k+ earners):

First tier:   $1,226 × 90% = $1,103.40
Second tier:  ($7,391 - $1,226) × 32% = $1,972.80
Third tier:   ($10,000 - $7,391) × 15% = $391.35
                                        ─────────
Total PIA (at age 67):                 = $3,467.55/month

At age 65 (with 13.3% reduction): 3,006.37/month**

Step 3: Adjust for Claiming Age

• If claiming before FRA: Apply reduction
• If claiming after FRA: Add delayed retirement credits (8% per year)

2025 Maximum Benefits

Note: Maximum benefits assume you earned at or above the Social Security wage base for 35+ years.

2025 Wage Base

• Maximum taxable earnings: 168,600 in 2024)
• Tax rate: 6.2% (employer and employee each pay 6.2%)

Your Specific Situation

Work History Analysis

Current (Age 41):

• 25 years of work history
• 15+ years earning $100k+

By Age 65:

• Will have 49 years of work history
• Social Security uses best 35 years
• Can drop 14 lowest-earning years

Earnings Profile Impact

With 15+ years at $100k+, you’re likely earning at or above the wage base cap for many years. This puts you in the upper tier of benefit recipients.

Conservative Estimate:

• AIME: ~10,000
• PIA at 67: ~3,700/month
• Benefit at 65: ~3,200/month

Optimistic Estimate (if you continue earning $100k+ until 65):

• AIME: ~13,689 (near maximum)
• PIA at 67: ~4,018/month
• Benefit at 65: ~3,484/month

Strategic Considerations

Option 1: Claim at 65

• Pros: Start receiving benefits 2 years earlier
• Cons: 13.3% permanent reduction
• Monthly: ~3,484
• Annual: ~41,808

Option 2: Wait Until 67 (FRA)

• Pros: Full unreduced benefit
• Cons: Wait 2 more years
• Monthly: ~4,018
• Annual: ~48,216

Option 3: Delay Until 70

• Pros: Maximum benefit (124% of FRA)
• Cons: Wait 5 more years
• Monthly: ~4,982
• Annual: ~59,784

Break-Even Analysis

Age 65 vs Age 67:

If you claim at 65, you receive 24 months of payments before someone claiming at 67 gets their first check. However, the person waiting gets 13.3% more per month for life.

Approximate break-even: Around age 78-79

• If you live past ~78: Waiting until 67 pays more total
• If you don’t live past ~78: Claiming at 65 pays more total

Age 67 vs Age 70:

Approximate break-even: Around age 82-83

Important Factors to Consider

1. Longevity

• Average life expectancy for 65-year-old male: ~84 years
• Average life expectancy for 65-year-old female: ~86 years
• If your family has longevity, waiting may be advantageous

2. Other Income Sources

• Do you have other retirement income (401k, IRA, pension)?
• Can you afford to delay Social Security?

3. Spousal Benefits

• If married, consider spousal claiming strategies
• Survivor benefits are based on the higher earner’s benefit

4. Continued Work

• If you work while collecting before FRA, benefits may be reduced
• 2025 earnings limit: $23,400/year before FRA
• Benefits reduced 2 earned above limit

5. Taxes

• Social Security benefits may be taxable
• Up to 85% of benefits can be taxed if income is high

Next Steps & Tools

Official SSA Calculators

1. My Social Security Account (most accurate)

   • Create account at ssa.gov
   • View your actual earnings record
   • Get personalized benefit estimates

2. SSA Quick Calculator

   • https://www.ssa.gov/OACT/quickcalc/
   • Rough estimates without creating account

3. Detailed Calculator (ANYPIA)

   • Download from ssa.gov
   • Most precise calculations

Recommended Actions

1. Create MySocialSecurity account to view your actual earnings history
2. Review your Social Security Statement annually
3. Calculate your specific AIME based on your actual earnings
4. Model different scenarios (retire at 65, 67, or 70)
5. Consider overall retirement plan including other income sources
6. Consult a financial advisor for personalized strategy

Key Takeaways

1. Your FRA is 67, not 65 - This is crucial for planning
2. Claiming at 65 = 13.3% permanent reduction in benefits
3. Expected benefit at 65: ~3,484/month (based on high earnings)
4. Each year you wait increases monthly benefits significantly
5. Break-even age is approximately 78-79 (65 vs 67)
6. Maximum flexibility: You can claim anytime between 62-70

Resources

• Social Security Administration: https://www.ssa.gov
• My Social Security Account: https://www.ssa.gov/myaccount/
• Benefit Calculators: https://www.ssa.gov/benefits/calculators/
• Retirement Planner: https://www.ssa.gov/benefits/retirement/planner/

Last Updated: November 2025 Based on 2025 Social Security bend points and wage base Note: Future benefits will be adjusted for inflation (COLA) and may have different bend points