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Beginning in May 2025, the Social Security Administration (SSA) continues its phased increase of the Full Retirement Age (FRA). This change impacts individuals born in 1959, who will reach their FRA of 66 years and 10 months during this year.
This adjustment is part of a gradual shift initiated by the 1983 amendments to the Social Security Act, aiming to address increased life expectancies and ensure the program’s sustainability.
Full Retirement Age (FRA) by Birth Year
The following table outlines the FRA based on birth year:
| Birth Year | Full Retirement Age (FRA) |
|---|---|
| 1955 | 66 years, 2 months |
| 1956 | 66 years, 4 months |
| 1957 | 66 years, 6 months |
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 or later | 67 years |
Note: Individuals born on January 1 should refer to the previous year’s FRA.
Impact of Claiming Benefits Early or Late
While you can start receiving Social Security benefits as early as age 62, doing so will result in permanently reduced monthly payments. Conversely, delaying benefits past your FRA can increase your monthly amount.
Early Retirement Reductions
If your FRA is 66 years and 10 months (for those born in 1959), retiring early will reduce your benefits approximately as follows:
| Retirement Age | Approximate Reduction |
|---|---|
| 62 | 29.17% |
| 63 | 24.17% |
| 64 | 19.17% |
| 65 | 13.33% |
| 66 | 6.67% |
| 66 years, 10 months (FRA) | 0% |
These reductions are permanent and affect your lifetime benefits.
Delayed Retirement Credits
Delaying benefits beyond your FRA can increase your monthly benefit by approximately 8% per year, up to age 70. For example, if your FRA is 66 years and 10 months and you delay benefits until age 70, your monthly benefit could increase by about 24%.
Earnings Limits and Tax Considerations
In 2025, if you are under your FRA for the entire year, $1 in benefits will be deducted for every $2 you earn above $23,400.
If you reach your FRA in 2025, $1 in benefits will be deducted for every $3 you earn over $62,160 until the month you reach your FRA.
Once you reach your FRA, there is no limit on earnings, and your benefits will not be reduced regardless of how much you earn.
Planning for Retirement in 2025
With these changes, it’s crucial to plan your retirement carefully:
- Determine Your FRA: Know your exact FRA based on your birth year to plan when to start collecting benefits.
- Consider Your Financial Needs: Assess whether you can afford to delay benefits for a higher monthly amount.
- Evaluate Health and Life Expectancy: Your health status and family history can influence the decision to claim benefits early or delay.
- Consult a Financial Advisor: Professional advice can help tailor a retirement plan suited to your individual circumstances.
The adjustments to the Full Retirement Age starting in May 2025 reflect ongoing efforts to adapt the Social Security system to changing demographics and life expectancies.
Understanding these changes is essential for making informed decisions about when to claim benefits.
By carefully evaluating your personal circumstances and consulting with financial professionals, you can optimize your retirement strategy for financial stability in your later years.
FAQs
What is the Full Retirement Age (FRA) in 2025?
In 2025, the FRA is 66 years and 10 months for individuals born in 1959. For those born in 1960 or later, the FRA is 67 years.
Can I still retire at 62?
Yes, you can begin receiving benefits at 62, but your monthly payments will be permanently reduced compared to waiting until your FRA.
How does delaying retirement affect my benefits?
Delaying benefits past your FRA increases your monthly payment by approximately 8% per year, up to age 70