If you’re preparing for retirement, the landscape is about to shift again. Starting in 2025, the Social Security full retirement age (FRA) will increase for those born in 1959, moving the threshold to 66 years and 10 months. While many people still associate 65 with full retirement, a series of gradual changes over recent decades are redefining the age when you can claim 100% of your Social Security benefits, and the financial impact is significant.
What Is Full Retirement Age and Why Does It Matter?
Full retirement age determines when you are eligible to claim 100% of your Social Security benefits based on your work history and lifetime earnings. In 2025, people born in 1959 will reach their FRA at 66 years and 10 months. For those born in 1960 or later, the FRA will be 67.
The Financial Impact of Early or Delayed Claims
The timing of when you claim your benefits can dramatically affect the amount you receive. If you claim benefits before reaching your FRA — at the earliest possible age of 62 — your monthly check will be permanently reduced by up to 30%. On the other hand, delaying your benefits until age 70 can increase your payment by up to 32% compared to the amount you’d receive at FRA.
For example, if you begin collecting at 62, you’ll receive only about 70% of your full benefit. Delaying until 70 allows you to receive the largest possible payment, thanks to delayed retirement credits.
Why Is the Full Retirement Age Changing?
The push to increase the full retirement age began with reforms passed in 1983 when Congress sought to secure Social Security’s financial future due to rising life expectancy and shifting demographics. The goal was to ensure that Social Security benefits remain available to future generations without overwhelming the system.
Starting in 1983, the FRA has been gradually increasing, with two-month increments. For example:
Born in 1958: FRA is 66 years and 8 months.
Born in 1959: FRA is 66 years and 10 months.
Born in 1960 or later: FRA is 67.
What Does This Mean for Your Retirement Planning?
The increase in FRA, along with other Social Security changes, can complicate your retirement planning. For 2025, expect a cost-of-living adjustment (COLA) of just 2.5%, which is smaller than last year’s increase. The maximum earnings subject to Social Security tax will rise to $176,100 from $168,600 in 2024.
Additionally, income limits for working beneficiaries are increasing:
Under FRA: You can earn up to $23,400 before your benefits are reduced.
Past FRA: You can earn up to $62,160 before your benefits are adjusted.
In response to these changes, the Social Security Administration is also moving towards appointment-only in-person services, which may impact how you access services.
Making the Right Social Security Decision
Deciding when to claim Social Security benefits is deeply personal. Financial planners often advise considering factors like health, family history, marital status, and overall financial situation.
Key Considerations:
Health: If you are in poor health, it might make sense to claim benefits earlier.
Family History: If you have a family history of longevity, delaying benefits could be beneficial.
Married Couples: If both spouses are eligible for benefits, waiting until 70 could be advantageous. The higher benefit for one spouse will increase survivor benefits for the other.
If you are financially underprepared for retirement, delaying your benefits could provide a larger income in the long term, especially if your savings are not sufficient to cover your expenses.
Challenges for Younger Generations
For younger baby boomers and Gen Xers, the changes are even more significant. Studies show that about a third of younger baby boomers will rely on Social Security for at least 90% of their retirement income. Meanwhile, Gen Xers have average savings that fall far short of what’s needed for a comfortable retirement.
With only 4% of people currently waiting until age 70 to maximize their Social Security benefit, these decisions are crucial for those relying on the program for future security.
As the full retirement age increases, your decisions around when to claim Social Security are becoming more critical. Whether you choose to claim early or delay, these choices will have lasting financial implications that could impact your retirement lifestyle for years to come.
