Most Americans may think of the standard retirement age as 65, but Social Security’s so-called “full retirement age” is already older than that, and it’s about to reach a age even higher in 2025.
Social Security’s full retirement age (FRA) refers to when workers can start claiming their full benefits, which is based on the number of years they worked and their earnings during their working years . The longer someone works and the higher their income, the more they can receive from Social Security when they finally claim their benefits.
While the FRA used to be 65 years old, Congress revised the program in 1983 to raise the retirement age threshold to account for longer life expectancies.
As part of this renewal, the FRA has been gradually increasing by two months at a time, based on a person’s year of birth. For example, people born in 1957 reached their FRA when they turned 66 years and 6 months, or from 2023; but people born in 1958 must be 66 years and 8 months old to be able to benefit from their full benefits, or from September 2024.
Full retirement age is established increase again in two months, up to age 66 years and 10 months, for people born in 1959. This means that the higher FRA for this cohort will take effect in 2025, and people born in 1959 will begin to benefit of your full benefits in November 2025. (You can calculate when you might get your full benefits at this Social Security Administration page.)
By the way, there is flexibility about when to claim Social Security benefits. People can claim as soon as they turn 62, but the offset is a reduced benefit that is locked in for the rest of their retirement.
For example, claiming at age 62 will result in a benefit that is about 30% less than your full benefit, a sacrifice many older Americans choose to make as many are forced into retirement. earlier than they expected or because they think it makes more sense to claim more years of guaranteed retirement income, even if it’s a smaller amount.
Young Boomers and Generation X
The FRA increase for people born in 1959 marks the penultimate age change, with the final jump for workers born in 1960 or later. These Americans won’t be able to claim their FRA until they reach age 67, meaning someone born in January 1960 has to wait until January 2027 to get their full retirement benefits.
This will mostly affect the younger baby boomers and Generation X, with the latest generation spanning 1965-1980.
These workers, however, are among the least prepared for retirement, according to recent research. The youngest boomers, those born between 1959 and 1965, started turning 65 this year, but many of them don’t have enough savings to see them through to old age, according to the ALI Retirement Income Institute. found earlier this year.
About 1 in 3 of these younger boomers will rely on Social Security benefits for at least 90 percent of their retirement income by age 70, according to the study. But Social Security benefits are designed to replace about 40% of a person’s earned income.
Meanwhile, Gen Xers are also preparing to hit retirement without saving enough for their golden years. The median retirement savings for Gen X households is around $150,000, well below the approx. 1.5 million dollars that Americans say they need to retire comfortably. Another study found that about 40% of Gen Xers don’t have a penny saved for retirement.
Meanwhile, older Americans can also maximize their Social Security benefits by delaying claiming until they turn 70. At this point, one’s profits are increased by about 25% more than their full profits. But only 4% of Americans wait until age 70 to claim the maximum Social Security benefit, seconds to a recent study by the Transamerica Center for Retirement Studies.