Goodbye to Retirement at 67 – the new age for collecting Social Security changes everything in the United States

For a long time, the retirement age in the US was considered to be 65 years. This was the age when most people would completely separate from their professional life and start a new phase of life. But now the situation has changed. Reforms were made from time to time in the Social Security system so that this scheme remains sustainable amidst the growing population and economic pressures. Under the Social Security amendments made in 1983, it was decided that the Full Retirement Age (FRA) would be gradually increased to 67 years.

In the year 2025, this will have a direct impact on those who were born in 1959. For them, the FRA will now be 66 years and 10 months. Even though this change is only of two months, it can have a profound impact on your monthly Social Security benefits, retirement planning and financial security.

Change in Social Security’s Full Retirement Age

The purpose of the 1983 reforms was to reduce the burden on the Social Security Fund and to ensure that future generations also get timely benefits. For this, FRA was increased by two months every year based on the birth year.

• FRA of people born in 1958: 66 years, 8 months
• FRA of people born in 1959: 66 years, 10 months
• FRA of people born in 1960 or later: 67 years

The direct effect of this change is that if you retire before FRA and claim Social Security, your monthly amount will decrease. For example:

• If a person born in 1959 retires at the age of 62, he will get about 29% less benefit.
• For people born in 1960 or later, this reduction can be up to 30%.

On the other hand, if you claim Social Security after FRA, your benefit increases by 8% every year. If you wait till 70 years, the total benefit can increase by 32%.

How to bridge the financial gap when retiring early?

Not everyone wants to wait till FRA. Many people prefer to retire early due to personal reasons, health or lifestyle. In such a situation, it is important that you prepare in advance.

1. Phased Retirement:

You can discuss with your employer working 3–4 days instead of the whole week. This will also maintain your income and facilities like health insurance will also continue.

2. Creating a cash reserve:

Experts recommend that you should have at least 18–24 months of expenses in a high-interest savings account. This will avoid the need to sell investments in case of recession or sudden expenses.

3. Use of extra space in the house:

If you have an extra room or parking space, then monthly income can be earned by renting it out.

• Room rent: $700–$1,000
• Parking rent: $150–$300
• Part-time jobs with benefits:
  • Many large retailers like Costco, Home Depot, and Trader Joe’s offer benefits like health insurance to part-time employees. By working 20–28 hours, you can secure both a steady income and insurance.

Tax-friendly strategies

Retiring early means you have to take care of taxes and health insurance costs. Here are some smart strategies that can help:

• Withdrawals from taxable accounts: Withdraw from taxable brokerage accounts first so your IRA and 401(k) accounts can keep growing for a long time.
• Roth IRA withdrawals: Contributions made to a Roth IRA can be withdrawn at any age without taxes or penalties. This is a very flexible option.
• Keeping income low: Keeping income low in the early years of retirement can help you take advantage of health insurance subsidies under the Affordable Care Act (ACA).
• Side income: Additional income can be earned by online tutoring ($30–$50 per hour), pet sitting, or selling handmade goods.

Retirement age may increase further in the future.

Although the process of raising the FRA to 67 is almost complete, experts are warning that it can be increased to 68 or 69 years in the future.

This will especially affect those who do physically demanding jobs or who have a younger life expectancy.

At the same time, there is a lot of pressure on the Social Security Fund. It is estimated that the trust fund may be exhausted by 2034, after which retirees will be able to get only 81% of the benefits. Options are being discussed to prevent this, such as increasing the payroll tax or extending the FRA further.

Social Security Planning Tools

The US government has made available several digital tools, such as

• My Social Security Account
• Retirement Age Calculator

With these, you can easily know how the change in FRA will affect your income and what kind of financial planning you should do.

Conclusion: Flexible and strategic planning is the solution.

This change in FRA in 2025 may seem small, but it reminds us that retirement is not dependent on age alone. It is all about your preparation, flexibility and strategic decisions.

• Build adequate cash reserves.
• Adopt part-time or side income options.
• Plan for tax-friendly withdrawals.
• And be prepared for possible future changes.

If you adopt these measures, not only will your financial security be strengthened, but you will also be able to enter the new chapter of your life with confidence and peace.

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