As part of ongoing changes to Social Security, the full retirement age (FRA) for future beneficiaries is set to increase in 2025.
This change will impact those born in 1959 and could affect how and when people choose to begin receiving their Social Security benefits.
Here’s what you need to know about this important shift in Social Security eligibility and how it could affect your retirement planning.
Contents
What is Full Retirement Age (FRA)?
Full retirement age (FRA) is the age at which you can start receiving your full, unreduced Social Security benefits. If you begin claiming Social Security before reaching FRA, your monthly benefit will be reduced.
Conversely, if you wait until after FRA to start receiving benefits, you can earn delayed retirement credits, increasing your monthly benefit amount.
Full Retirement Age Increasing in 2025
The FRA for Social Security was originally set at 65 when the program began in the 1930s. However, following the 1983 Social Security reforms, the FRA gradually increased to 67 for those born after 1937.
Starting in 2025, the FRA will increase to 66 years and 10 months for individuals born in 1959. This change will affect those born in 1959, who will qualify for full Social Security benefits starting in November 2025.
After 2025, the FRA will increase again to 67 for those born in 1960 or later. This final change is expected to be the last under the 1983 Social Security reform law, though future reforms could potentially alter the FRA once again.
Why is the FRA Increasing?
The increase in FRA was implemented as part of a broader effort to adjust Social Security to an aging population. As life expectancy rises and the number of retirees increases, the program faces funding challenges.
By gradually increasing the FRA, the government seeks to balance out the growing strain on the Social Security trust fund.
Social Security Benefits Before and After FRA
Americans have several options when it comes to claiming Social Security benefits:
- Early Retirement (Age 62): You can start receiving benefits as early as age 62, but your monthly benefit will be reduced by as much as 30% depending on how early you begin.
- Full Retirement Age (FRA): Once you reach FRA, you’ll receive your full, unreduced monthly benefit.
- Delayed Retirement (Age 70): If you delay your retirement past FRA, you can earn up to 8% more per year in delayed retirement credits, which can significantly boost your monthly benefit.
Impact of the FRA Increase
The change in FRA will require some workers to wait longer to claim full Social Security benefits, which could impact their retirement planning.
If you were planning on retiring at age 65, for example, you’ll need to wait an additional 1 year and 10 months to receive the full benefit.
For individuals born in 1960 or later, they will need to wait until age 67 to claim their full Social Security benefits.
The Cost-of-Living Adjustment (COLA) in 2025
To adjust for inflation, Social Security benefits are also subject to an annual cost-of-living adjustment (COLA). In 2025, the COLA increase is expected to be 2.5%, the smallest increase since 2021.
This increase will help to maintain the purchasing power of retirees, especially as inflation continues to affect the cost of living in the U.S.
| Key Information | Details |
|---|---|
| Full Retirement Age (FRA) | 66 years, 10 months for 1959-born |
| Final FRA Age (1960+) | 67 years |
| 2025 COLA Increase | 2.5% |
| Minimum Age to Claim | 62 |
| Maximum Age for Benefits | 70 (with 8% delayed retirement credit) |
The Financial Strain on Social Security
The Social Security trust fund faces financial challenges due to the aging U.S. population and the number of Baby Boomers reaching retirement age.
According to projections, the Old-Age and Survivors Insurance Trust Fund (OASI) could be depleted by 2033, leading to an across-the-board benefit cut of 21%. For many retirees, this would mean a $16,500 reduction for a couple who retired at the time of depletion.
The increase in Social Security’s full retirement age in 2025 is a reminder that retirement planning requires careful attention and adaptation to changes.
As life expectancy continues to rise and financial pressures mount, understanding how these shifts affect your Social Security benefits is crucial for ensuring a secure financial future. Be sure to factor in these changes and plan accordingly to maximize your retirement benefits.
FAQs
Why is the full retirement age increasing?
The FRA is increasing as part of the 1983 Social Security reforms, which were designed to ensure the long-term viability of the program by gradually raising the age at which people can claim their full benefits. This change helps address the strain caused by the aging population and the increasing number of retirees.
How much will my Social Security benefits be reduced if I claim before FRA?
If you claim benefits before FRA, your monthly benefit can be reduced by up to 30%, depending on how early you start receiving them. The earlier you begin, the greater the reduction.
What happens if I wait until after FRA to claim Social Security?
If you delay claiming Social Security benefits past FRA, you can earn up to 8% more per year in delayed retirement credits, which can significantly increase your monthly benefit amount.
