Big changes are coming for Social Security as full retirement age (FRA) ticks up again in 2025. If you’re dreaming of that stress-free retirement, this hike affects how soon you can stop working and how much money you’ll end up with each month.
The New Retirement Age Reality
If you were born in 1959, you’ll hit the FRA in 2025 at 66 years and 10 months. That adds two months to the age born in the year before you, which was 66 years and 8 months, and is part of the gradual increase that started with 1983 reforms that intended to keep Social Security on the books given that people are living longer. For anyone born in 1960 or later, the FRA is flat at 67—meaning that folks have to plot a longer work horizon before the clock hits full Social Security.
Financial Implications of Claiming Early
Whether you’re on the cusp of retirement or just under the wire, you’re likely still weighing the option of claiming at 62, the earliest you can collect. That is still a popular choice, but the penalties for taking benefits that early keep inching up. If you file at 62 in the year 2025, your monthly benefits will shrink 30 percent, compared to taking the same benefits at FRA.If you flip open your Social Security statement and see that your planned monthly benefit at full retirement age (FRA) is, say, 1,000, and you decide to claim at age 62 in 2025,you’ll wind up getting about 30you’ll see something like 708 in the bank if your birthday is in1959. ALSO READ: Stop Garnishments Eating Your Social Security: Take Control Today…
In 2025, if you’re collecting early benefits and still working, you’ll get to earn 23,400 before the government starts to clip your check.That’sabump from22,320 the year before. Go over the limit and you’ll forfeit a dollar in benefits for every two dollars you earn above that cap.
If you’re willing to wait a couple extra years, your benefit could be much larger. Stay on the sidelines for just one year past FRA, and your monthly benefit grows by 8%. Stick it out until age 70, and you could see a total bump of 26%—a nice little paycheck boost. So for the 1959 crowd, if full retirement age is 67, benefits could go from 1,000to1,260 by just delaying.
And your monthly paycheck won’t be the only change in 2025: Social Security is also handing out a 2.5% cost-of-living adjustment (COLA), smaller than the 3.4% bump in 2024 but still something to help that dollar stretch at the grocery store or at the gas station.
Grasping these updates is key if you want to time your Social Security claim just right and organize your retirement money to stretch as far as possible.