Kim
For decades, retirement at age 65 was the expected norm in the United States. However, that standard is shifting. Starting in 2025, Americans born in 1959 will see their Full Retirement Age (FRA) increase to 66 years and 10 months, delaying access to full Social Security benefits.
Though this may seem like a small adjustment, it has significant implications for when and how retirees can claim their benefits.
What Changed in Social Security’s Full Retirement Age?
The FRA has been gradually increasing over the years. For individuals born in 1959, the FRA is now officially 66 years and 10 months beginning in 2025. This is up from 66 years and 8 months for those born in 1958.
For anyone born in 1960 or later, the full retirement age is set at 67.
Impact of Claiming Benefits Early or Late
Your claiming age affects your monthly Social Security payments:
| Claiming Age | Percentage of Full Benefit (Born 1959) | Impact |
|---|---|---|
| 62 | ~70.8% | ~29.2% reduction |
| 66 years, 10 months | 100% | Full benefit |
| 67 | ~101.3% | Slight increase |
| 70 | ~125.3% | Maximum delayed credits |
- Claiming at 62 reduces your benefits permanently.
- Waiting until 70 increases your benefits by up to 25% or more.
- The closer you are to FRA, the less reduction you’ll see.
How to Bridge the Gap Before Full Retirement Age
If you’re hoping to retire early, here are strategies to manage the delay in full Social Security access:
1. Phased Retirement
Transition to part-time work or a reduced schedule instead of fully exiting the workforce. Even a few days per week can cover essentials like food, rent, or insurance.
2. Cash Cushion
Build a financial reserve of 18–24 months of living expenses. Store this in a high-yield savings account or low-risk investment to cover your gap years.
3. Rent Extra Space
If you have a spare room or unused garage, consider long-term rental. This can generate $700–$1,000 a month, while driveway or garage rentals in urban areas can yield $150–$300 monthly.
4. Part-Time Jobs With Benefits
Retailers like Costco, Home Depot, and others offer part-time roles with health coverage. This can be a smart option until you qualify for Medicare at 65.
Tax-Efficient Withdrawal Strategies Before FRA
Planning for early retirement includes managing how you withdraw funds to minimize taxes:
1. Use Taxable Accounts First
Withdraw from brokerage or non-retirement accounts to avoid early withdrawal penalties and preserve retirement savings.
2. Leverage Roth IRA Contributions
Contributions (not earnings) to Roth IRAs can be withdrawn tax-free and penalty-free at any age, providing flexible access to cash.
3. Keep Income Low
Maintaining a lower income in early retirement could help you qualify for Affordable Care Act subsidies, reducing healthcare costs significantly before age 65.
4. Side Hustles
Supplement income through side gigs like tutoring, online freelancing, pet sitting, or selling crafts. This can ease the pressure on your savings.
What’s Ahead: Possible Increases Beyond Age 67
While the increase to 66 years and 10 months for the 1959 cohort is now official, discussions are ongoing about raising the FRA further—potentially to 68 or even 69. While no laws have been passed yet, it’s important to prepare for the possibility by:
- Building a flexible financial plan
- Maintaining part-time income options
- Keeping your withdrawal strategy tax-smart
- Having a diversified investment portfolio
Flexibility is key in adapting to any future Social Security reforms.
The retirement landscape in the U.S. is evolving. With the full retirement age increasing to 66 years and 10 months in 2025, retirees must adapt their strategies to maintain financial stability.
Whether you plan to retire early or delay until age 70, understanding the implications of Social Security’s age shift is critical.
Use smart withdrawal techniques, create a strong financial buffer, and consider part-time income to navigate the transition smoothly.
As discussions about raising the retirement age continue, flexibility and preparation will ensure you can retire when you’re ready—not when the government says you can.
FAQs
What is the new full retirement age for Social Security in 2025?
The new FRA in 2025 is 66 years and 10 months for individuals born in 1959.
Can I still claim Social Security benefits at age 62?
Yes, but your benefits will be permanently reduced by approximately 29% if you start claiming at age 62.
Why is the retirement age increasing?
The retirement age is rising gradually to ensure the sustainability of Social Security as people live longer and spend more years in retirement.