If you have been planning your Social Security retirement, you might want to double-check the age requirements for full benefits. Starting in 2025, there are changes to the full retirement age that could affect when you can collect your benefits in full. This shift is part of an ongoing effort to align Social Security with longer life expectancies and financial realities. Let us dive into what is changing and what you need to know.
What is the full retirement age in 2025?
In 2025, the Social Security full retirement age (FRA) continues to rise for individuals born after 1954. Here is a breakdown of the changes:
- Those born in 1958 will reach their full retirement age at 66 years and 8 months.
- Individuals born in 1959 will see their FRA move to 66 years and 10 months.
- Anyone born in 1960 or later will have a full retirement age of 67.
If you were born in 1957 or earlier, your FRA remains unchanged. These incremental adjustments have been in place for decades, stemming from legislation passed in 1983.
Can you still retire early?
Yes, you can still retire as early as age 62. However, retiring before your FRA means you will receive a reduced monthly benefit. Here is what you should keep in mind:
- The earlier you claim, the smaller your monthly checks will be.
- Benefits are reduced by approximately 6-7% for each year you claim before FRA.
- For example, if your FRA is 67 and you claim benefits at 62, your monthly payments will be about 30% less than if you waited.
On the other hand, delaying benefits past your FRA can increase your monthly payments. Waiting until age 70 offers the maximum benefit increase.
Why is the retirement age increasing?
The shift in the full retirement age reflects two key factors:
- Longer life expectancies: People are living longer, which means they are collecting benefits for more years. This puts a financial strain on the Social Security program.
- Program sustainability: Adjusting the FRA helps reduce lifetime benefit payouts, contributing to the program’s solvency as funding challenges grow.
As Michael Ryan, founder of MichaelRyanMoney.com, explains, “This is not just a bureaucratic adjustment but a response to increasing life expectancies and the financial challenges facing Social Security.”
Read more: Big changes coming to social security in 2025: don’t miss these important modifications
How much can you earn while receiving benefits?
If you plan to work while receiving Social Security benefits, there are earning limits to consider:
- Early retirees (before FRA) can earn up to $23,400 annually in 2025 before benefits are reduced.
- Full retirees (at FRA or older) can earn up to $62,160 without penalties.
Earnings above these limits result in a temporary reduction in benefits. However, once you reach your FRA, the reductions are recalculated, and you may get those withheld amounts back over time.
What other updates are coming in 2025?
Here are additional changes that could impact your Social Security benefits:
- The cost-of-living adjustment (COLA) for 2025 is set at 2.5%. This increases the average monthly payment from $1,927 to $1,976.
- The maximum earnings subject to Social Security taxes will rise from $160,200 to $176,100.
These updates aim to adjust benefits and taxes to reflect economic changes.
Read more: Social Security Calculator: How much Social Security will I get if I make $100,000 a year?
Should you wait to claim Social Security?
Deciding when to claim your Social Security benefits is a personal choice based on your financial needs, health, and retirement plans. Keep in mind that:
- Waiting until your FRA ensures you get your full benefit.
- Delaying beyond your FRA boosts your payments by about 8% annually until age 70.
By understanding these changes, you can make a more informed decision about your retirement.
Continue Reading:
Social Security Calculator: How much Social Security will I get if I make $95,000 a year?
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