USA Retirement Age Increase in 2025 – Check New Retirement Age & Revised Eligibility

USA Retirement Age Increase in 2025 – A change in the retirement age is going to be implemented in the US from 2025, which will affect millions of citizens planning retirement and those receiving Social Security benefits. This change is under a legal amendment implemented in 1983, under which the Full Retirement Age (FRA) is being gradually increased.

In this article, we will know what will be the new retirement age in 2025, what will be its effect on taking early retirement, what are the benefits of taking late retirement and how you can make your retirement plan better.

New retirement age of America in 2025

In 2025, the full retirement age for people born in the year 1959 will be 66 years and 10 months. This means that at this age they can get full Social Security benefits without any deduction.

What will happen if you take early retirement?

You can also retire at age 62, but this will result in a permanent reduction in your monthly pension.

For example, if your FRA is 66 years and 10 months and you retire at 62, your pension could be reduced by about 29.17%. If your original pension was $2000 per month, you would only get $1417 per month.

Benefits of late retirement

If you retire after your FRA age, your pension will increase by 8% every year. This increase applies until age 70.

Example: If your pension is $2000 at FRA, and you wait until age 70, your pension could grow to $2640 per month.

Who should retire early and who should retire late?

Early retirement is for people:

• Those who are not in good health
• Those who need money immediately
• Those who think they will not be able to get a pension for a long time

Late retirees:

• Those who are healthy and have a long life expectancy
• Those who have income from other sources
• Those who want to get maximum benefits during their lifetime

COLA (Cost of Living Adjustment) increase in 2025

Every year, the US government increases Social Security pensions according to inflation, which is called COLA.

• COLA increase in 2025: 2.5%
• The average monthly payment will increase by $49
• This increase was 3.2% in 2024, so the rate is slightly lower this time

Want to work after retirement?

If you want to keep working after retirement, some limits apply:

• Earnings limit in 2025: $23,400 per year
• If you are younger than FRA and earn more than that age, your pension will be reduced by $1 for every additional $2
• Once you reach FRA, this limit is removed and your pension is recalculated and paid in full

Impact on Future Retirement Plans

• Young people may have to work longer in the future
• The role of private savings and investments will increase
• People can plan to delay taking Social Security benefits

How to plan for retirement in 2025 and beyond?

1. Estimate your potential pension
   • Go to SSA.gov to find out your projected benefit.
2. Decide the right time
   • If you need early income, retire early
   • If you need a higher monthly benefit, wait until age 70
3. Focus on additional savings
   • Social Security can be only a part of your total income. For this, consider other options like:
   • 401(k) or IRA accounts
   • Pension plans (if available)
   • Private investments and savings
4. Seek help from a financial advisor
   • An expert can help you formulate the most appropriate strategy by looking at your financial situation

Conclusion

The new rules coming into effect from 2025 are very important for people planning for retirement in the US. Whether you want to retire early or late, it is important to know these rules so that you can make your future financially secure. Social Security benefits are only one part, the rest can be saved and planned so that you can live a peaceful retirement life.

FAQs On USA Retirement Age Increase in 2025