Retirement has always been a sensitive topic for millions of Americans. Making long-term financial decisions requires clarity and planning. One of the most important factors is the age at which you can receive the full benefit from the Social Security.
For decades, many people assumed that the standard age was 65, however, that reality has changed. Starting in 2025, a specific group will see an adjustment in its full retirement age, which raises questions and confusion. Understanding this change is key to ensuring financial stability in old age.
The new retirement age
The increase in the full retirement age isn't something unexpected. It's part of a long-term plan that dates back to the Social Security Amendments of 1983.
Those born in 1959 will see their full retirement age set at 66 years and 10 months. Meanwhile, those born in 1960 or later will have to wait until age 67 to claim their full, unreduced benefits.
Although it seems like a small change, it can significantly affect the financial plans of those approaching retirement age.
Early retirement: what you should know
Not everyone wants to wait until the full age to retire. Many choose early retirement at age 62. However, you need to be careful here.
For those born in 1959, retiring early means a 29% reduction in their monthly benefits. For those born in 1960 or later, this reduction reaches up to 30%.
It's a significant blow that can impact the quality of life in retirement if you don't plan properly.
Recommendations for those considering early retirement
If you're considering retiring before the full age, Social Security experts suggest some strategies:
- Withdraw from taxable accounts: Plan carefully where you'll take your funds from so you don't affect your benefits.
- Keep your modified adjusted gross income low: This helps minimize the tax impact on your benefits.
- Extra income: Consider side jobs if you need additional money during the transition.
Taking these steps can help you reduce income loss and keep some stability while you enjoy your retirement.
The change in Social Security's retirement age is a reminder that financial planning is more important than ever. Although the difference may seem small, for those born in 1959 or later, it can make a big difference.
If you're close to retirement age, evaluate your options, adjust your plans, and consider alternatives to keep your income stable. Information and preparation are your best allies for a peaceful retirement in the United States.