In 2025, the Social Security Administration (SSA) will implement a crucial change to the full retirement age (FRA), affecting millions of Americans. The FRA is the age at which you can claim full Social Security retirement benefits without any reduction in your monthly payments. This change could impact your retirement planning, so it’s essential to understand when you’ll be able to collect your full benefits.

What is Full Retirement Age (FRA)?

Your full retirement age (FRA) is the age at which you can start collecting Social Security benefits without facing any reductions. If you claim benefits before reaching your FRA, your monthly benefits will be permanently reduced, whereas waiting past your FRA could increase your benefits through delayed retirement credits.

The age at which you can claim full Social Security benefits has changed over the years and is primarily based on the year you were born. For example, those born in 1943 to 1954 have an FRA of 66 years. However, starting in 2025, the full retirement age will begin to rise for certain individuals.

Social Security’s Full Retirement Age Will Rise in 2025

The Social Security Administration has announced that starting in 2025, the FRA will increase for individuals born after 1960. The exact changes are as follows:

• Born between 1960 and 1964: Your FRA will be 67.
• Born after 1964: For people born after 1964, the FRA will gradually increase to 67 years and 2 months, and further adjustments may be made in the future.

For example, if you were born in 1965, your full retirement age will be 67 and 2 months. This increase will affect how soon you can start receiving your full monthly benefits.

Why is Social Security’s Full Retirement Age Changing?

The adjustment in the FRA is due to the increasing life expectancy of Americans. As people live longer, the SSA needs to adjust the FRA to ensure the solvency of the Social Security program. By raising the FRA, Social Security aims to reduce the number of early retirees who claim benefits before they are eligible for full benefits, which helps ensure the program remains financially viable for future generations.

The SSA evaluates life expectancy data regularly and adjusts the FRA to ensure that the program is sustainable. As the population continues to age, these changes are necessary to balance the program’s budget.

When Can You Start Collecting Benefits?

Although your FRA may increase, you still have the option to start collecting Social Security benefits earlier or later than your FRA:

• Early Retirement: You can begin receiving Social Security benefits as early as age 62. However, this comes with a permanent reduction in your monthly payments. The reduction is typically 25-30% less than your full benefit amount, depending on how early you start.
• Delayed Retirement: If you choose to wait past your FRA to start collecting benefits, you’ll receive delayed retirement credits. These credits increase your monthly benefit by a certain percentage (around 8% per year) for each year you delay claiming benefits up until age 70. This option could be beneficial if you plan to continue working and want to maximize your monthly Social Security benefits.

How Much Will You Receive?

Your Social Security benefits are based on your highest 35 years of earnings, adjusted for inflation. The higher your earnings, the higher your Social Security benefits will be, up to the maximum benefit allowed by the SSA. Starting at your FRA, you’ll receive 100% of your benefit amount based on your lifetime earnings record.

If you start earlier, your monthly payment will be reduced. On the other hand, if you delay until after your FRA, you’ll receive a higher benefit due to the delayed retirement credits.

How to Prepare for the Change in FRA

To prepare for the change in the full retirement age, it’s essential to know your FRA based on your birth year and consider the financial impact of starting your benefits early versus waiting. Start planning for retirement by estimating your Social Security benefits and consider other sources of retirement income.

You can visit the Social Security Administration’s website for more details on your full retirement age and how to estimate your benefits.

Conclusion

With the full retirement age set to rise in 2025, it’s important to understand how this change will affect your Social Security benefits. While it may require you to wait longer to collect full benefits, there are options to start early or delay your retirement for a higher monthly benefit. Take the time now to evaluate your retirement goals and plan accordingly to ensure you receive the full benefits you’re entitled to when the time comes.

For more detailed coverage on Social Security benefits and retirement planning, visit the Social Security Administration.

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