Additional Coverage:
Social Security Full Retirement Age Impacts 2025 Retirees
Planning for retirement often hinges on Social Security benefits. However, a key change to the full retirement age (FRA) is on the horizon for those turning 65 in 2025, impacting their monthly benefits. Understanding this change is crucial for making informed decisions about when to claim.
The 2025 Social Security Age Change
The Social Security Act of 1935 originally set the FRA at 65. However, legislation passed in 1983 gradually increased this age. For anyone born in 1960 or later, the FRA is now 67.
This means individuals turning 65 in 2025 will need to wait until 2027 (age 67) to receive full benefits. Claiming earlier will result in a permanently reduced monthly payment.
How the Age Change Affects You
Those born in 1960 will experience this shift directly in 2025. They will need to wait two additional years to reach FRA compared to those born earlier. For example, someone born in 1959 has an FRA of 66 years and 10 months, while anyone born in 1960 or later has an FRA of 67.
Waiting until FRA ensures full benefits. However, delaying claiming past FRA, up to age 70, increases monthly benefits by 8% annually, according to the Social Security Administration (SSA). There’s no additional benefit to delaying past 70.
Planning for the Change
Here’s how the FRA change could influence your retirement planning:
- Delaying Retirement: Claiming before FRA permanently reduces benefits. Claiming at 62 with an FRA of 67 could reduce benefits by up to 30%, according to the SSA. Delaying retirement can help secure a larger monthly benefit.
- Working Beyond Full Retirement: Delaying claiming until after FRA increases benefits by 8% per year up to age 70. Working longer can significantly boost your monthly payout, especially as Social Security benefits are calculated based on your 35 highest-earning years.
- Accepting a Smaller Benefit: Some individuals cannot work until their FRA due to health or other circumstances. Claiming at 62 will result in a reduced benefit. The SSA estimates that the maximum benefit at FRA in 2024 is $3,822, compared to $2,710 for someone claiming at 62.
- Working Part-Time: Working part-time or starting a side hustle can help cover expenses while delaying Social Security, avoiding the permanent benefit reduction from claiming early. Be aware of the Social Security earnings test, which can temporarily reduce benefits if you earn too much before FRA.
- Cutting Expenses: Reducing expenses by downsizing, eliminating debt, or adopting a more modest lifestyle can help delay claiming and maximize benefits.
Other Considerations
While the FRA change is important, it’s not the only factor affecting when to claim. Life expectancy, health, marital status, and financial needs all play a role. Consulting a financial advisor can help determine the best claiming strategy for your individual situation.
The Bottom Line
With the FRA at 67 for those born in 1960 or later, 2025 retirees must carefully consider when to claim. Delaying maximizes monthly payments, while claiming early results in permanent reductions. The optimal choice depends on individual circumstances, financial situation, health, and retirement goals.