New Retirement Age 2025 : A massive change is coming into American-style retirement; starting 2025 in phases, the Social Security Administration is going to effect changes that could affect millions: A full benefit no longer equals retirement at 67. With increases in life expectancy and mounting pressure on the Social Security trust fund, it is: Time the U.S. government changed the eligibility timelines and benefit structures, which everyone set to retire needs to fathom.
New Retirement Age?
For decades, 67 was synonymous with the Full Retirement Age (FRA) for Social Security benefits. However, times are changing. Starting with people born in 1960 or later, the shift to Full Retirement Age 68 is now formally in place. This comes amid serious concerns for assuring the longevity of Social Security, which, without a hitch, can run into funding shortfalls sometime in the mid-2030s.
The consequence amounts to those wishing to retire at 67 getting their monthly benefits permanently reduced unless they wait a full year’s time. Early retirement—and herein lies the irony- still exists at age 62, but with a monthly payment decline of 35 percent, up from the prior 30 percent decline.
Why This Change Matters To You
The entire retirement planning, including monthly payments, is affected by the new rules. For a prospective early retiree, this could be thousands lost over time. On the benefit side, further delaying retirement past the new full retirement age can increase one’s benefits by 8% per year until 70.
These adjustments may also have the working-age population find themselves staying longer in the workforce. While such a feature might be seen as a welcome opportunity to save, others, particularly those in taxing jobs, might feel pushed or vulnerable.
What Should You Do Now?
If you were born in 1960 or later, now would be the best time to rework your retirement plan. Start with using SSA’s online benefit estimator to determine a forecast of your new FRA with early and delayed retirement scenarios. Look into what this means in terms of your savings, lifestyle, and planning for health insurance. Finally, meet with a financial advisor to discuss how your 401(k) or IRA plans can compensate for some of the lost income. After all, Social Security was never meant to carry a person’s retirement completely.
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