The Social Security Administration announced significant changes for 2025 that will impact millions of Americans. The full retirement age increased to 66 years and 10 months for those born in 1959, while it rises to 67 for anyone born in 1960 or later. This change reflects longer lifespans and increased demand on the system.
While you can still retire as early as 62, your monthly benefit will be permanently reduced. For example, if your full retirement age is 67 and you claim at 62, you’ll only receive 70% of your full benefit amount. However, delaying retirement beyond your full retirement age comes with a significant upside.
Your benefit will increase by 8% annually until age 70. So if your full benefit at 67 is $2,000 per month, waiting until 70 would boost it to $2,480 – a 24% increase. A 2.5% Cost-of-Living Adjustment also took effect in 2025 to help offset inflation.
The average monthly Social Security check rose from $1,927 to $1,976, providing about $50 more per month to help retirees keep up with rising costs. If you claim Social Security before your full retirement age but continue working, you can earn up to $23,400 in 2025 without any benefit reduction.
Changes to retirement age and benefits
Exceed that limit, and $1 will be deducted for every $2 earned above the cap. Once you reach full retirement age, the earnings cap disappears. The Social Security Fairness Act, passed in 2025, was a major win for public sector workers.
It eliminated the Windfall Elimination Provision, which reduced Social Security for those with public pensions, and the Government Pension Offset, which cut spousal and survivor benefits for government retirees. Over 2.8 million workers will now receive full benefits, and more than 1.1 million retirees have already gotten retroactive payments averaging $6,710. To navigate these changes, it’s wise to create an account on the My Social Security portal to view your benefit estimate and work history.
When possible, consider delaying benefits to age 70 to maximize your monthly income. Remember that Medicare eligibility still begins at 65, so you may need gap coverage if you retire earlier. Don’t rely solely on Social Security for retirement.
Look into other income sources like 401(k)s, IRAs, and additional investments. A financial planner can help model different retirement scenarios and guide you in making tax-smart decisions. Most importantly, stay informed about evolving retirement policies to make the most of your benefits.
Image Credits: Photo by Andre Taissin on Unsplash
