The changes coming to full retirement age, FRA, in 2025 will affect thousands of Americans. FRA defines the age at which many seniors will start collecting monthly benefits in full amounts. Although one could begin claiming SSI benefits from 62 years, their value will be reduced for as long as the individual receives them. Therefore, delaying claims past the FRA will result in higher benefit amounts until the individual turns 70.
Read more: Social Security Update: In 21 days the SSI direct payment will be out for the month of January.
These changes come at a time when there is an increased alarm over the long-term solvability of the social security system. The Administration projects that it may run out of money to pay for full payments in the mid-2030s unless Congress intervenes. FRA increases create ways to relieve the financial pressures as part of larger efforts to respond to demographic realities of increasing longevity.
Gradual changes to full retirement age
The FRA changes in 2025 continue a phased approach to adjusting benefit eligibility. According to Michael Ryan, a finance expert and founder of MichaelRyanMoney.com, “This isn’t just a bureaucratic adjustment but a response to increasing life expectancies and the financial challenges facing Social Security.”
For individuals born between 1943 and 1954, the FRA remains at 66 years. However, those born later must wait slightly longer for full benefits:
- Born in 1955: FRA is 66 and 2 months.
- Born in 1956: FRA is 66 and 4 months.
- Born in 1957: FRA is 66 and 6 months.
- Born in 1958: FRA is 66 and 8 months.
- Born in 1959: FRA is 66 and 10 months.
- Born in 1960 or later: FRA is 67.
Co-space the needs of the program in the base since they do not severely affect recipients. According to the financial literacy instructor, Alex Beene, “It is unlikely that these changes will have a dramatic effect on recipients: Retirement ages get incrementally increased by a few months.”
Individuals may still file for benefits before reaching their FRA. However, all early claims will receive reduced monthly payments. For instance, a person born in 1960 who claims benefits at age 62 will receive only about 70% of his full monthly benefit, while if he waits until age 70, he will get payments that total approximately 124% of his FRA amount.
Read more: Big changes coming to social security in 2025: don’t miss these important modifications
Additional updates for 2025
In addition to the FRA changes, other updates will impact Social Security recipients in 2025. The cost-of-living adjustment (COLA) for 2025 has been set at 2.5%, increasing the average monthly payment from $1,927 to $1,976. This adjustment reflects inflationary pressures and aims to help retirees maintain purchasing power.
For early retirees, the annual earnings limit before benefits are reduced will increase to $23,400. Those who have reached their FRA will see their earnings limit rise significantly, to $62,160. Meanwhile, the maximum earnings subject to Social Security taxes will increase from $160,200 to $176,100, potentially boosting the program’s revenue.
The debate over further raising the FRA continues in Congress. Proposals suggest increasing the FRA to 68 or even 70 to address funding shortfalls. Advocates argue this would improve the program’s solvency by encouraging longer workforce participation and reducing lifetime benefit payouts. However, Ryan notes the potential downsides: “What about workers in physically demanding jobs or those with shorter life expectancies?”
Read more: Social Security Update: In 22 days the SSI direct payment will be out for the month of January.
While these changes may not drastically alter benefits for most recipients, they underscore the need for individuals to carefully plan their retirement strategies. Understanding how FRA adjustments and other updates affect benefits is essential for maximizing Social Security’s value in retirement.
