Starting January 1, 2025, the Social Security Administration will introduce changes to the retirement age in the United States. The age at which retirees can claim full Social Security benefits without penalty has been gradually increasing each year. Those born in 1959 will need to wait until they are 66 years and 10 months old to claim their full benefits.
This is two months later compared to the previous year, where the full retirement age was 66 years and 8 months for those born in 1958. Individuals born in 1960 and later will have to wait until they turn 67 to reach full retirement age. For example, if you were born in January 1959, you will now need to wait until November 2025 to retire with full benefits.
The earliest you can claim Social Security retirement payments is still at age 62. However, this comes with a permanent reduction in benefits of about 30%. For each of the first 36 months retiring before the full retirement age, benefits are reduced by around 0.55% per month.
For each additional month beyond 36 months, the reduction is about 0.42% per month.
Changes to Social Security benefits
The Social Security Administration has also announced a Cost-of-Living Adjustment (COLA) of 2.5% for 2025.
This will increase benefits and raise the amount required to earn each Social Security credit. It will also adjust the wage cap for Social Security taxes. These changes aim to keep pace with inflation and cost-of-living expenses.
The SSA allows individuals to apply for benefits up to 4 months before they plan to receive them. So if you are nearing retirement, consider applying in advance. The SSA provides resources to help you understand how early retirement will affect your benefits.
The formula adjusts your monthly payments based on the number of months you retire before reaching the full retirement age. It is important to stay updated on these and other key changes to ensure a smooth transition into your retirement phase. Consult with a social security or retirement expert for specific advice.
