What Is Normal Retirement Age?

Definition and Examples of Normal Retirement Age

In most cases, if you have been working, you have been paying a portion of your income into Social Security. That guarantees 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 available benefits as defined by the Social Security Administration (SSA).

• Acronym: NRA
• Alternate Name: Full retirement age

The SSA sets your NRA based on when you were born. Examples of normal retirement age include the following:

• For people born in 1937 or before, their full retirement age is 65.
• For people born between January 2, 1943, and January 1, 1955, full benefits begin at age 66.
• Those born in 1960 or later must wait until they turn 67.
  

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

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.

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 2022, you will lose $1 in benefits for every $2 in wages you earn over $19,560 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 $51,960.

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 ten years
3. End service with your employer

Pay attention to age 59 1/2, which 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 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.