The year 2025 marks a significant change in the Social Security retirement age, which will affect millions of Americans. This change includes new rules for when people can access full benefits and how this affects the monthly amount they receive.
Workers can begin receiving their full monthly benefits when they reach retirement age. Although these benefits can be claimed as early as age 62, doing so before reaching the full retirement age results in lower monthly payments.
Why is this change in the retirement age relevant?
With this change, retirees must reconsider when to apply for their benefits, as this has a direct impact on the total amount they will receive during retirement. The right decision could significantly impact their long-term finances.
What should you know about the changes?
Beginning in 2025, the beneficiary’s full retirement age is determined by their year of birth.
- Born between 1943 and 1954: Full retirement age at 66 years.
- Born in 1955: Full retirement age at 66 years and 2 months.
- Born in 1956: Full retirement age at 66 years and 4 months.
- Born in 1957: Full retirement age at 66 years and 6 months.
- Born in 1958: Full retirement age at 66 years and 8 months.
- Born in 1959: Full retirement age at 66 years and 10 months.
- Born in 1960 or later: Full retirement age at 67 years.
In 2024, those born in the second half of 1957 and the first four months of 1958 reached their full retirement age. During 2025, people born in the last eight months of 1958 and the first two months of 1959 will also reach their full retirement age.
Impact of the adjustments to the retirement age
The current system gradually increases the full retirement age, adding two months for every birth year. This change reflects an attempt to balance the Social Security program’s finances while adapting to longer life expectancy and economic pressures on the system.
It is important to note that beneficiaries can still claim their payments beginning at age 62, albeit at a reduced amount. Those who wait until full retirement age, or even 70, will receive significantly higher payments, allowing them to maximize their income over time.
What happens if you decide to retire sooner or later?
If you claim benefits before the full retirement age, you will receive a lower monthly payment. If you choose to wait until after this age, the monthly amount will gradually increase until you reach 70.
Additional adjustments in 2025
In addition to the change in retirement age, the cost-of-living adjustment (COLA) will be modified. In 2025, the COLA will rise by 2.5%, increasing the average monthly payment from $1,927 to $1,976. This increase reflects efforts to protect retiree purchasing power from inflation.
The changes to the Social Security retirement age in 2025 provide an opportunity for retirees to reconsider their financial strategies. Understanding how these changes affect your benefits is critical to making informed decisions that will ensure your financial stability in the future.
If you are approaching retirement age, speak with a financial advisor and use the available tools to effectively plan your retirement. This change affects not only how and when you receive your benefits, but also how you can maximize your income in your golden years.
Also See :- Everything you need to know about SSI payments in January 2025
