by Most Americans may consider the standard retirement age to be 65, but the so-called “full retirement age” for Social Security is already older than that – and is about to reach an even higher age in 2025.
Social Security’s full retirement age (FRA) refers to when workers can begin claiming their full benefits, which are based on the number of years they have worked and their earnings during their working years. The longer someone works and the higher their income, the more they can receive from Social Security when they finally apply for benefits.
While FRA was 65 years old, Congress revised the program in 1983 to raise the retirement age to account for longer life expectancies.
As part of this innovation, the FRA has been increased by two months, based on a person’s year of birth. For example, people born in 1957 reached their FRA when they turned 66 years and 6 months old, or as of 2023; but people born in 1958 must reach age 66 years and 8 months to qualify for their full benefits, or from September 2024.
The full retirement age will rise again by two months to 66 years and 10 months for people born in 1959. That means the higher FRA for that cohort will go into effect in 2025, with people born in 1959 eligible for their full benefits in November 2025. (You can calculate when you can get your full benefits on this Social Security Administration page. )
Certainly, there is flexibility about when to claim Social Security benefits. People can claim once they turn 62, but the trade-off is a reduced benefit that is fixed for the remainder of their pension.
For example, filing a claim at age 62 will result in a benefit that is about 30% less than your full benefit – a sacrifice many older Americans are choosing to make as many are forced into retirement sooner than they expected or because they think it makes more sense to claim more years of guaranteed retirement income, even if it is a lower amount.
Young boomers and Gen Xers
The increase in the FRA for people born in 1959 marks the penultimate age change, with the last jump occurring for workers born in or after 1960. Those Americans won’t be able to claim their FRA until they are 67 years old, meaning anyone born in January 1960 must wait until January 2027 to receive his full retirement benefits.
This will mainly affect the youngest baby boomers and Generation Xers, with the last generation stretching from 1965 to 1980.
However, according to recent research, these workers are among the least prepared for retirement. The youngest boomers — those born between 1959 and 1965 — started reaching 65 this year, but many of them don’t have enough savings to support themselves in old age, according to the ALI Retirement Income Institute. found earlier this year.
About 1 in 3 of these younger boomers will rely on Social Security benefits for at least 90% of their retirement income by age 70, the study found. But Social Security benefits are intended to replace about 40% of a person’s work income.
Meanwhile, Generation X is also preparing to retire without having saved enough for their golden years. The average retirement savings of Generation X households is about $150,000 – well below the limit $1.5 million that Americans say they should retire comfortably. Another study found that about 40% of Gen Xers haven’t saved a dime for retirement.
Meanwhile, older Americans can also maximize their Social Security benefits by delaying claiming until they reach age 70. At that point, a person’s benefits are increased approximately 25% higher than their full benefits. But only about 4% of Americans wait until they are 70 to claim the maximum Social Security benefit. according to to a recent study by the Transamerica Center for Retirement Studies.
