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By Suzanne Blake
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In 2025, Social Security's full retirement age is changing, and millions of Americans could be affected.
This age is when seniors can receive monthly benefits for the full amount they're entitled to. The benefit can be claimed earlier, starting at age 62, but the payments will be less. Meanwhile, the Social Security Administration is set to run out of money for making full payments by the mid-2030s, unless Congress takes action.
In 2025, the full retirement age will increase for many seniors.
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"This isn't just a bureaucratic adjustment but a response to increasing life expectancies and the financial challenges facing Social Security," Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.
Under next year's rules, those born between 1943 and 1954 will have a full retirement age of 66, but everyone born after that will have to wait a bit longer.
Those born in 1955 will have a full retirement age of 66 and two months, and 1956 babies will be at 66 and four months.
Those born in 1957 will see their full retirement age moved to 66 years and six months, with 1958 babies earning full payments at 66 years and eight months.
Finally, those born in 1959 can get full Social Security checks at 66 and 10 months, and those born in 1960 will reach full retirement age at 67.
"This doesn't equate to seniors not being able to access their Social Security benefits before the age of 67, but rather that accessing them prior to that age will result in a reduced payout," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
Under the new rules, those who were born in the second half of 1957 and those born in the first four months of 1958 reached full retirement age in 2024.
In 2025, people born in the last eight months of 1958 will reach full retirement age, while those born in the first two months of 1959 will be at full retirement age near the end of the year.
"These changes more than likely won't have a dramatic effect on recipients," Beene said. "Even with the full retirement age increasing, it's doing so very incrementally by a few months."
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While those who file for Social Security benefits before their retirement age won't receive a full payment, those who wait to collect until after their full retirement age will see the amount increase each year up to age 70.
In 2025, the cost-of-living adjustment has been updated to 2.5 percent, which will increase the average monthly payment from $1,927 to $1,976.
Also, early retirees will be able to earn up to $23,400 yearly before their benefits are reduced, while those who reached full retirement age will see their limit increase to $62,160.
In addition, the maximum earnings subject to Social Security taxes will jump, from $160,200 to $176,100.
Congress continues to debate the merits of raising the full retirement age even higher, to 68 to 70, based on the program's impending funding crisis and longer life expectancies.
"Proponents argue this bolsters the program's solvency by encouraging longer workforce participation while reducing lifetime benefit payouts," Ryan said. "But what about workers in physically demanding jobs or those with shorter life expectancies?"
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