Effective January 1, 2025, the Social Security Administration will implement new regulations regarding retirement age in the United States. The age at which retirees can access full Social Security benefits without penalties has been steadily rising each year. For those born in 1959, they will be required to wait until reaching 66 years and 10 months to claim their complete benefits.
This marks an increase of two months compared to the previous cohort, where individuals born in 1958 had a full retirement age of 66 years and 8 months. Anyone born in 1960 or later must wait until they are 67 to achieve full retirement age. For illustration, if your birth month is January 1959, you will have to wait until November 2025 to retire with all benefits intact.
You can still begin receiving Social Security retirement benefits as early as age 62. However, this option comes with a permanent cut in benefits, estimated at around 30%. For each of the first 36 months of retiring before reaching full retirement age, your benefits will be decreased by approximately 0.55% each month.
For any additional month beyond the initial 36, the reduction is roughly 0.42% for each month.
Modifications to Social Security benefits
The Social Security Administration has also revealed a 2.5% Cost-of-Living Adjustment (COLA) for the year 2025.
This adjustment will not only elevate the benefits but will also modify the earnings required for each Social Security credit. Additionally, the wage cap for Social Security taxes will be adjusted. These measures are designed to keep pace with inflation and living cost increases.
The SSA permits individuals to apply for benefits up to four months prior to their intended start date. Therefore, if you are approaching retirement, think about submitting your application ahead of time. The SSA offers resources to assist you in understanding the impacts of early retirement on your benefits.
The formula for calculating your monthly payments accounts for the number of months you retire before achieving full retirement age. Staying informed about these and other significant changes is essential for a seamless retirement transition. It is advisable to consult with a Social Security or retirement professional for tailored guidance.
