For decades, the idea of retiring at age 65 has been ingrained in the minds of millions of people. This figure served as a reference for calculating savings, designing financial plans, and planning for the future after work. However, reality is showing a shift that directly affects those approaching this stage.
Starting in 2025, Social Security is introducing a change that may seem small, but it has very significant implications. The full retirement age will no longer be the same for all workers. Understanding this adjustment is key to avoiding mistakes and keeping a solid economic foundation upon reaching retirement.
The new retirement age according to Social Security
The increase in the full retirement age doesn't come out of nowhere. It is part of a strategy outlined more than four decades ago in the Social Security Amendments of 1983. This plan was designed to ensure the system's sustainability in the long term.
The change directly affects people born in 1959. For this group, the full retirement age is set at 66 years and 10 months. Meanwhile, those born in 1960 or later will have to wait until age 67 to claim 100% of their benefits.
This adjustment may cause confusion among those who are close to retiring. The important thing is to recognize that it is not a sudden, across-the-board increase, but rather a step that was already planned. Its application depends on each worker's year of birth.
Consequences of retiring early
The possibility of retiring at age 62 still exists, but the consequences are harsher. For those born in 1959, doing so at that age means a 29% reduction in monthly benefits. In contrast, people born in 1960 or later will face an even greater loss, reaching 30%.
These percentages translate into less money available throughout retirement. The decision to retire early must be evaluated carefully. It is not just about accessing funds sooner, but about accepting a permanent decrease in future income.
Official recommendations for early retirement
Social Security authorities suggest taking steps to reduce the impact of early retirement. One of the main recommendations is to withdraw first from taxable accounts. By doing so, people can better preserve the value of tax-advantaged savings accounts.
It is also advised to keep the modified adjusted gross income low. This helps optimize the tax burden and avoid having part of the benefits taxed unnecessarily. It is a practical step that makes a difference in long-term planning.
Finally, if the money is not enough, it is suggested to consider extra sources of income. Secondary jobs, even part-time, can offer financial relief. This resource, although not always the ideal option, can help keep financial stability until reaching full retirement age.