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 helping to shore up the program, the increase in full retirement age was intended to reflect Americans’ longer life expectancy than when the program was established in 1935, but the change has yet to be finalized, and many lawmakers are considering raising the full retirement age even further.
But first, what is the full retirement age and why does it matter, especially because workers can retire both before and after and receive benefits. Full retirement age refers to the age at which a worker can receive 100% of his or her Social Security payments.
If they retire too soon, they risk losing up to 30% of their benefit, whilst delaying retirement allows them to earn up to 24% more in monthly payouts.
However, whereas before the complete retirement age was set at 65 for everyone, it now depends on your birth year. Those born between May 2, 1958, and February 28, 1959 will see an increase in the full retirement age by 2025.
If you belong to this category, you will reach your full retirement age that year. Those born earlier have already attained the full retirement age, whilst those born in 1960 or later must wait until age 67 to obtain their 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, waiting pays off. The amount of money a person is eligible to receive from Social Security depends on when they retire and how much they earned throughout their careers, but the Administration gives a few guidelines to demonstrate the difference in claiming ages.
For those who reach full retirement age in 2024, the maximum monthly benefit is $3,822. Thanks to inflation adjustments, that figure will grow to $4,018 per month in 2025, or little more than $48,000 per year.
However, if you delay retirement until age 70, the numbers improve considerably more. By 2025, the maximum monthly payment for someone waiting until 70 will be $5,108, or almost $61,300 per year.
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