For many Americans, the thought of retirement often revolves around reaching the magical age of 65. However, the full retirement age (FRA) for Social Security benefits has been gradually increasing, and for those born in 1959, it will hit 66 years and 10 months starting in 2025.
While the change may seem small, it has important implications on how and when you can claim your benefits. Understanding how these changes affect your retirement strategy is key
to making the most of your Social Security benefits.
What Exactly Changed in Social Security’s Full Retirement Age?
The 1983 Social Security Amendments gradually pushed the FRA from 65 to 67, with a schedule to raise it in two-month increments. Those born in 1959 will see their FRA at 66 years and 10 months starting in 2025.
For individuals born in 1960 or later, the full retirement age will be 67. This change means that those who were expecting to retire at 66 years and 8 months (for the 1958 cohort) will now have to wait an additional two months.
For people who plan to retire earlier than their FRA, early filing at 62 results in a significant reduction of monthly benefits—about 29% for those born in 1959, and up to 30% for those born in 1960 or later.
However, delaying your Social Security claim past the FRA can result in an increase of up to 8% annually, capping at a 32% boost if you wait until age 70.
How to Bridge the Gap Between Early Retirement and Full Benefits
For those who wish to retire before reaching the full retirement age, there are a few strategies to make the transition smoother without relying on a full-time job:
- Phased Retirement: Consider negotiating a three- or four-day workweek. Working part-time, even as little as 15 hours a week, can help cover essential costs like health insurance and groceries without needing to dip into retirement savings.
- Cash Runway: It’s crucial to have a financial cushion to support you between retirement and full Social Security benefits. Financial experts recommend saving 18-24 months of living expenses in a high-yield savings account or money-market account. This can provide stability without the need to sell investments in a downturn.
- Monetize Extra Space: If you have extra space in your home or driveway, consider renting it out. Long-term room rentals can bring in $700–$1,000 a month, and driveway parking in busy urban areas can earn $150–$300.
- Bridge Jobs with Benefits: Some national retailers, such as Costco, Home Depot, and Trader Joe’s, offer part-time jobs that come with medical benefits for employees who work 20-28 hours a week. These jobs can provide you with some income and health insurance while waiting to reach your full retirement age.
Smart Withdrawal and Tax Strategies for Early Retirement
If you plan to retire early or bridge the gap before full Social Security benefits, there are tax-smart strategies to consider:
- Withdraw from Taxable Accounts: To avoid penalties and let retirement accounts like IRAs or 401(k)s continue growing, consider withdrawing from taxable brokerage accounts first.
- Roth IRA Withdrawals: Roth IRA contributions (not earnings) can be withdrawn tax- and penalty-free at any age. This provides a zero-tax option to access funds without affecting your tax situation.
- Keep Modified Adjusted Gross Income Low: Maintaining a low income during early retirement can help you qualify for Affordable Care Act subsidies, saving thousands on health insurance premiums until Medicare eligibility at 65.
- Side Income: If you need extra income, consider side gigs like tutoring online for $30–$50 an hour, pet sitting, or selling handmade crafts. These options allow you to earn money without committing to a full-time job.
Planning for Future Changes in Retirement Age
While the change from 65 to 67 is nearly complete, lawmakers are already debating the possibility of increasing the full retirement age to 68 or even 69 in the future.
While no new laws have passed yet, it’s a good idea to prepare for these potential changes by creating a flexible retirement plan. Having a cash reserve, part-time income, and tax-efficient withdrawal strategies will help buffer any future shifts in the Social Security system.
Retirement planning has never been more complex, and the gradual rise in the full retirement age is just one of the factors that require careful consideration.
Although the increase in retirement age to 67 may seem like a minor change, it highlights the importance of having a plan in place to navigate the shift.
Building a cash reserve, considering part-time work, and using smart tax strategies will allow you to retire when you’re ready, not when Social Security tells you to.
Keep in mind that flexibility is key, especially as lawmakers continue to debate further increases to the retirement age.
FAQs
What is the new full retirement age for Social Security?
Starting in 2025, the full retirement age for Social Security benefits will be 66 years and 10 months for people born in 1959, and 67 for those born in 1960 or later.
Can I still claim Social Security benefits at 62?
Yes, you can still claim Social Security benefits at 62, but you will receive only 70% of your full benefit amount. The longer you wait, the higher the monthly benefit will be.
Why is the retirement age being increased to 67?
The full retirement age is being increased to 67 to address the longer life expectancy of Americans. The change helps maintain the sustainability of the Social Security system.
How can I prepare financially for the new full retirement age?
To prepare for the new full retirement age, experts recommend building a cash buffer to cover 18-24 months of living expenses, considering part-time work, and planning your Social Security claim strategically.
Why rise the ss age when the government can retire in for years with a pension. And get ss. And have health care.
Because the government only cares about them selves. They care a less about how we living comfortable or not. It is called greed and they hoping we have no choice but too depend on them keep the poor poor.
Separation of classes. Republicans will just make a new law for themselves and take what they want. Get use to it.
Unbelievable how goluble you people are
Medicare? Medicare takes cash out of my payroll checks every week. Will the amount that has been accumulated through out the years will this amount pay for my Medicare Ins. when I turn 65 years old? Or can I stay with the Health Ins. that I have now?
I am 67 years old. I get $147 a month. Retirement.
I am 67 years old and I think I should have money what I get every month on my retirement. I’ve been working over 35 a year and some more money so I should be getting a big check every month.
That’s bullshit shit changing the age you know how hard it is to get jobs when you 61 pretty damn hard in San Luis county California I know I been busting my ass all my life an it’s harder after having hernia surgery.because the hernia surgery aren’t guaranteed so you can keep getting hernias I know last yr feb 2024 had hernia surgery release from recovering from the surgery an two months later I got another hernia an if u don’t tell the business about the hernia surgery if you get hurt or get another from lifting heavy items or bending over a lifting or pushing or pulling heavy products where u employed they won’t be responsible for the injury u will because u didn’t tell them
Amen I agree💯 to go from 65/75000 a yr to 20000+ then taking taxes and medicare who in the hell can live off ot wts left 🤬👹 back in the 70s look at the raises they got holy crap and now they want to give 2% 4% it absolutely pisses me off…excuse my french but they need to try and live off that BS
Leave ssi it is what we need to live after we retire,so trump get a life and leave what people have so to collect when we retire.you are not good for what we need all you do is try to take away what we need you are such a asshole
I voted for President Trump and I do like the many things he has the balls to do finally, but I am disappointed in the lack of help he has offered the elderly in our beautiful country. He made us promises!
COLA has been a joke…2.5% ? They need a one time 10% COLA for social security to catch all in need to inflation. Then go to 2% per year for next 7 years…
Please get your lazy peeps off the welfare system that can work!There lazy repeaters riding the system it’s not fair for the American person to have to work for a lazy person!!!!! Come and look out my window for a day and you’ll see what I’m talking about!
Trumps friends and family need more money. Why are people complaining ? Isn’t that what you all voted for? You will be happy with your red hats and ts forever. Save those gold coins and use your almost a phone often. Are we great yet? Cause you can just send him money. Be happier and greater ✨️
I think its bs keep raising retirement age how many of us isnt gonna be able to even enjoy it and someone else gets are hard earned money. Stop it!
What about the money our government so call borrow from. S.S and never paid back?? Take take take!!
Why are you taking it from working class citizens why don’t you take it from the people you let have social security that come from other countries and haven’t worked 40 plus years and receive benefits after 10 years or the person that’s illegal using fake ss# numbers
You said it Dave and I agree. This is some B.S.
This is stupid we should be able to retire at 60 our government is pathetic