Alicia H. Munnell — Social Security’s real retirement age is 70

Social Security’s retirement age is 70. The simple fact is that monthly benefits are highest at age 70 and are reduced actuarially for each year they are claimed before age 70. This is a relatively new development, which may explain why Social Security’s retirement age is the best-kept secret in town. But I think it’s time we told folks. And then we need to clarify what all this talk about raising the so-called full retirement age really means.... 

Social Security’s full retirement age used to be a meaningful concept. Before 1972, maximum monthly Social Security benefits were paid at 65, and monthly benefits were not increased for claiming later. In 1972, Congress introduced a Delayed Retirement Credit, which increased benefits by 1% of the full retirement age benefit for each year of delay. The result was that those who retired later got a little bonus for delaying. But a 1% credit did not come close to compensating for the fact that late claimers had to wait and would get benefits over fewer years. In 1983, the adjustment was raised to 3% and that percentage was increased gradually to 8% in 2008. At this point, the adjustment provided by the Delayed Retirement Credit is actuarially fair – that is, it keeps lifetime benefits constant for those who claim after the full retirement age. In doing so, the Delayed Retirement Credit has rendered the full retirement age a largely meaningless concept. It does not describe the age when benefits are first available. That is age 62. It does not describe the age when monthly benefits are at their maximum. That is age 70. It really does not have any meaning in terms of an official retirement age.

MarketWatch
Social Security’s real retirement age is 70
Alicia H. Munnell
(h/t Gaius Publius at AmericaBlog)