In an important update for Social Security beneficiaries, Social Security has announced new changes that will affect the full retirement age (FRA) for future retirees. This change, coming in 2025, is likely to impact how much you will get from Social Security when you retire.

The concept of a “full retirement age” means the age at which you can start receiving your full Social Security benefits without any reduction. When Social Security was first introduced in the 1930s, the FRA was 65. However, in 1983, changes were made that raised the FRA gradually to 67 for people born after 1960. In the next year, the FRA will rise again for people born in 1959. They will become eligible for full benefits at 66 years and 10 months, starting in November 2025.

How Does This Change Affect You?

If you were born in 1960 or later, you’ll be affected by this new rule. The full retirement age will be 67 for people born after 1960. So, if you were born in 1960, you will have to wait until 2027 to receive full Social Security benefits. This increase is the last one that will happen under the rules set in the 1983 law.

It’s important to know that even before you reach full retirement age, you can begin claiming your Social Security payments as early as age 62. However, if you start claiming early, your monthly payments will be reduced by up to 30%. On the other hand, if you wait longer to claim your Social Security, you can get more money each month. For example, for every year you delay your claim past full retirement age, your payment will increase by 8% each year, all the way up to age 70.

How Can You Maximize Your Social Security Benefits?

The key to maximizing your Social Security benefits is to carefully choose when to claim them. If you wait until full retirement age, you will receive the full amount of your Social Security benefit. However, if you claim it earlier, you’ll receive less. For example, if you claim your benefits at age 62, your monthly payment could be reduced by as much as 30%. If you wait until age 70, your monthly payout can increase by up to 32%.

To give you a clearer idea:

• If you start receiving your Social Security benefits at age 62, the maximum monthly benefit is $2,710.
• At full retirement age (around 66 or 67), your maximum monthly benefit will be $3,822.
• If you delay until age 70, you can get $4,873 per month.

Choosing when to claim Social Security depends on many factors, such as your health, job, and personal financial situation. If you are healthy and can afford to wait, delaying your claim may be a smart choice as it will give you higher payments later on.

What About the Cost-of-Living Adjustment (COLA)?

In 2025, Social Security beneficiaries will see a 2.5% increase in their payments. This adjustment is meant to help keep up with inflation and rising costs. However, this is the smallest COLA increase since 2021. Although inflation has slowed down compared to recent years, prices are still high, which makes this small increase helpful for retirees trying to maintain their spending power.

Social Security’s Financial Future: What You Need to Know

Social Security is facing challenges due to the aging population and the number of retirees increasing over time. The program’s finances are at risk because there are fewer workers paying taxes into the system compared to the number of retirees collecting benefits. According to experts, Social Security’s trust fund may run out of money by 2033. This would result in a reduction in benefits by about 21%.

For a typical dual-income couple, this could mean a loss of $16,500 per year in benefits. This highlights the importance of planning ahead for retirement and considering the long-term health of the Social Security system.

Conclusion

The increase in the full retirement age will affect many future retirees, and it’s important to plan ahead. By understanding the rules and options available, you can make smart decisions about when to claim your Social Security benefits to get the most out of your payments.

If you are approaching retirement, it is a good idea to consider your health, financial needs, and personal goals before deciding when to start receiving Social Security payments. By carefully timing your claims, you can ensure a more comfortable retirement.