Those intending to claim retirement benefits in 2025 should keep in mind that the Social Security Administration makes adjustments to the program on a regular basis in order to maintain it current.
One of the most significant changes over the previous few decades has been the gradual increase in full retirement age, which workers have been experiencing since the 1980s, when the program was on the edge of failure.
In addition to strengthening the program, the increase in full retirement age was intended to reflect Americans’ longer life expectancy since the program’s inception in 1935, but the change has yet to be finalized, and many lawmakers are considering raising the full retirement age even higher.
But first, what is the full retirement age, and why does it matter, especially because workers can retire before and after that age and still receive benefits? The full retirement age is the age at which a worker is eligible to receive 100% of his or her Social Security income.
If they retire too early, they risk losing up to 30% of their benefit, whilst delaying retirement allows them to earn up to 24% more in monthly payouts.
Previously, the retirement age was set at 65 for everyone, but now it is determined by your birth year. By 2025, those born between May 2, 1958, and February 28, 1959 will have a higher full retirement age. If you fall into this category, you will achieve your full retirement age in that year.
Those born earlier have already reached full retirement age, whilst those born in 1960 or after must wait until age 67 to receive full benefits.
Of course, many people do not wait until they reach full retirement age before claiming their benefits. Some people prefer to forego 30% of their benefits and claim as soon as possible, at age 62, for a variety of reasons, including health considerations.
Some people do not expect to live beyond their 70s and want to enjoy retirement and their family while they can, so they choose to retire as soon as possible, regardless of the loss of benefits.
Others chose the original retirement age of 65, which still provides a big advantage. When a person reaches the age of 65, they become eligible for Medicare, which means they are no longer dependent on a job for cheap healthcare, and they choose to leave their job one or two years before reaching the full retirement age.
Some, but only a handful, elected to wait until age 70, when a person can collect benefits. Delaying till this age will result in no benefits because there will be no more higher payments.
However, nearly no one can afford to wait if they are not working, and most organizations will not hire someone full-time until they reach the age of 70, limiting the number of people who can benefit from this circumstance.
Maximum Social Security Benefits depending on retirement age in 2025
Having said that, patience pays dividends. The amount of money a person is eligible to receive from Social Security is determined by when they retire and how much they earned during their employment, but the Administration provides a few guidelines to highlight the differences in claiming ages.
For people reaching full retirement age in 2024, the maximum monthly benefit is $3,822. Thanks to inflation adjustments, that sum will rise to $4,018 per month in 2025, or little more than $48,000 per year. However, delaying retirement until age 70 improves the numbers significantly.
By 2025, the maximum monthly payout for someone who waits until 70 will be $5,108, or about $61,300 annually.
ALSO SEE : Official list of Social Security reforms starting January 1, 2025—clear warning for retirees