If you are on the verge of retirement, you must be contemplating when to start receiving funds from Social Security. In the past, 65 was considered the ideal age for retirement; however, in 1983, a law was passed that gradually started raising this age. This was because people in the United States were beginning to live longer than in times gone by. This age is still increasing as of 2025 and will depend on your birth. It is critical to know when you will start getting your payments, as this heavily influences the monthly payment you will receive by that point.
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What’s new with Social Security in 2025?
The “full retirement age” (FRA) in Social Security is the age from which you can receive your full pension based on your lifetime earnings. This age can differ for each individual. For example:
- If born in 1958, FRA is 66 years and 8 months.
- If born in 1959, 66 years and 10 months.
- If born in 1960 or later, FRA is 67 years.
So, your birth year may decide when you can withdraw cash to the full extent.
How much money will you get at different ages?
- Now, what is important: What if you withdraw earlier than your FRA? Suppose you start early, you will get less money every month —less by up to 30%!—depending on how many years you withdrew before FRA.
- But if you delay it after the FRA, your amount increases by 8% for every year until the age of 70. So if you postpone it till 70, you will be getting 32% more money than what you would have at FRA.
As per the Social Security Bureau, in case your full pension is $1,000 and if you were to start taking it from 62:
- Those born in 1958 will take $716, 28.33% less.
- Those born in 1959 will take $708, 29.17% less.
- Those born in 1960 or later will take $700, 30% less.
So the sooner you take it, the lesser it is worth. For some, waiting could be the best course of action.
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How to pump up retirement income?
Stephanie McCullough, owner of Sophia Financial, states that our life expectancy being unknown, we have to work on all these assumptions to prevent our calculations from falling apart. Lowering day-to-day expenses is to be encouraged on her part—rent for example, car installments, electricity, or water bills. I am not saying do not enjoy life—enjoy life! But, when the fixed expenses are low, the fun things will get more money and a few bumps on life’s path. Therefore, it certainly is wise to manage expenses well; in that way, there will always be a cushion for retirement. When the question of taking your money come about? It is probably the largest concern when anyone is nearing retirement: When do I start taking Social Security? In Stephanie’s words, “So there are advantages to waiting until 70. You’ll get more per month, inflation adjustments will be larger, and if you’re married, the pension that your spouse will get after you will also be larger. It can make a huge difference over time.” But, even sometimes, taking it younger is the right thing to do, especially when money is needed urgently to run the household. No one answer fits everyone. Some things to help inform this decision:
- Health and age: Take early if most of your family dies younger. Assure a good wait if you foresee a long life.
- Married or single: Married couples will get an opportunity to leave their partner higher pension.
- Money needs: Take early if you need money now. If you can wait, do so for a bigger amount when it comes.
- Other income: Keep in mind this as you weigh your alternatives if you have other investments or retirement income.
What will these changes actually mean for you?
These changes come into effect now, so planning is important around them. Here are things to consider:
- If over 62: You are to check FRA. If close, you decide whether or not to take it now or wait.
- If under 60: Retirement expectations change. Your FRA is increasing, so save more or postpone retirement.
The longer you wait, the more you benefit: If money is not a concern, wait for a larger pension. More changes to Social Security in 2025.
There will be some additional changes on top of the FRA increase:
- COLA: 2.5% in 2025 versus 3.2% in 2024 in pension increases.
- Tax limit: Increase of top Social Security tax earnings from $168,600 to $176,100.
- Appointment system: You will now require an appointment to work in the office.
- Earnings test: A person can earn up to $23,400 in 2025 if he/she works before FRA without having the pension cut. After FRA, a person can earn up to $62,160.
Conclusion
With the changing rules of Social Security, planning will have to start now. Whether you can get a pension now or have a few years left, understanding the new FRA is important. Consult a financial expert and change your strategy so that you get more benefits later. Don’t take money in a hurry- choose the right time considering your age and savings.