Starting Thursday, January 2, 2025, the age to receive full Social Security benefits will rise to 66 years and 10 months. This is part of a gradual increase that began years ago and will continue until the full retirement age reaches 67 in 2026. Here’s everything you need to know about this change, how it affects you, and why it’s happening.
Why Is the Retirement Age Changing?
The increase in the retirement age is part of a law passed in 1983. Over time, the full retirement age has been rising from 65, with the next step being 66 years and 10 months. For those born after 1960, the full retirement age will be 67. This gradual rise is due to the growing number of people living longer, meaning more people are receiving Social Security benefits for longer periods.
What Is the Full Retirement Age?
For people born in 1960 or later, the full retirement age is 67. However, if you were born in 1959, your full retirement age is 66 years and 10 months. For those born in 1958, it’s 66 years and 8 months. It’s important to know when your full retirement age is because that’s when you can begin receiving your full benefits.
Can You Receive Benefits Early?
Yes, you can start receiving Social Security benefits as early as age 62. However, if you choose to do so, you’ll get a reduced amount—about 30% less than what you would receive at full retirement age. This reduction stays for life.
If you earn more than $23,400 per year before your full retirement age, Social Security will take back $1 for every $2 you earn over that limit. Once you reach full retirement age, there is no income limit, and you can continue working without any penalties.
What Happens If You Wait to Collect Benefits?
If you decide to wait until after your full retirement age to collect benefits, you will receive a bonus. This is called a “delayed retirement credit,” which increases your benefits by 8% for every full year you delay collecting benefits. For example, if you wait until age 70 to start receiving Social Security, you’ll get a significantly higher amount.
This delay also benefits your spouse. If you are married, your spouse can collect a higher benefit based on your delayed retirement credits when you pass away.
How Much Can You Receive?
The maximum monthly Social Security benefit in 2024 is $3,822 for someone who retires at the full retirement age. If you retire at age 62, the maximum is $2,710, and if you wait until age 70, it increases to $4,873. The average monthly Social Security benefit in 2024 is $1,925.
Each year, Social Security benefits are adjusted for inflation. In 2025, there will be a 2.5% increase in benefits to help people keep up with rising costs of living.
When Should You Retire?
If you’re healthy and your family has a history of living long lives, it’s often better to wait as long as possible to start receiving your benefits. The longer you wait, the more you’ll receive each month. Some financial advisers recommend waiting until age 70 to get the highest possible benefit.
If you’re in a situation where you need money sooner or you don’t expect to live long, it might make sense to start receiving your benefits earlier. However, remember that you’ll receive less money each month if you take benefits before your full retirement age.
What’s Happening with the Retirement Age in the Future?
There have been talks about increasing the retirement age to 69, especially by some members of the Republican Party. However, there’s strong opposition to this idea, and it has not been implemented. Some argue that raising the retirement age further would mean people would receive fewer years of benefits. Others think it’s necessary to keep Social Security sustainable as more people are living longer.
Why Is Social Security Facing Financial Problems?
The biggest reason Social Security is struggling financially is that people are living longer, meaning they are collecting benefits for a longer time. In 1940, the average life expectancy for men was just 61.4 years, and for women, it was 65.7 years. Now, people born in 1959 can expect to live until 74 for men and 80.1 for women.
Social Security’s trust fund is projected to run out of money by 2033. If nothing changes, retirees will only receive 79% of their benefits starting that year.
What’s the Solution?
The solution to Social Security’s financial issues will likely involve tough decisions, such as reducing benefits, raising taxes, or raising the retirement age further. However, there’s no clear plan in place yet, and it’s uncertain when Congress will take action. Some experts predict that Congress might continue delaying the problem until they have no choice but to act.
