The Social Security retirement age is changing again! Most people in the U.S. tend to imagine that 65 is the ‘’magic age’’ when Americans can stop working and start enjoying life. However, this number is a different one now: the official retirement age with full Social Security benefits isn’t 65 nor 66 anymore… Once you know the specific changes you might think it’s just a small change, but its impacts are huge for those who are planning their retirement. So, let’s find out more about this change.
Changes in Social Security
This change isn’t something new, it goes back to a reform passed in 1983, which gradually raised the Full Retirement Age (the age to collect the full Social Security benefits). At this time, the age was changed from 65 to 67 in two-month increments. For example:
- If you were born in 1958, your FRA is 66 years and 8 months.
- If you were born in 1959, it will be 66 years and 10 months (from 2025).
- If you were born in 1960 or later, the age will be 67 years.
What if you want to retire earlier?
Of course you can. You can still claim your Social Security benefits for retirement from the moment you are 62 years old. However, not everything is positive because the earlier you retire, the less money you will receive each month:
- For those born in 1959, retirement at 62 means losing 29% of the benefits.
- For those born in 1960 or later, this cut will be 30%.
But, if you decide to wait beyond your FRA, Social Security rewards you: your benefits increment 8% per extra year you wait. You should know the maximum percentage they will give you is 32% if you retire at 70 years old.
Bridging the gap before FRA
Not everybody want or can keep working until they are 67, that’s why many people look for alternatives to cover expenses before being the Social Security FRA such as:
- Work less, not stop completely: you can ask your employer to cut your week down to 3 or 4 days. This way you’ll still get some income and possibly keep benefits like health insurance.
- Keep a backup fund: Try to save enough to cover a year and a half to two years of your regular expenses and put this money in a safe, easy-to-access account.
- Rent extra space: A spare bedroom could bring in $700–$1,000 a month if you rent it out or even renting your driveway in a busy area could earn an extra $150–$300. It doesn’t sound bad, does it?
- Look for part-time work with perks: some companies (Costco, Home Depot, and Trader Joe’s) offer health insurance even if you only work 20–28 hours a week.
Tax strategies for early retirement
Planning is not just a matter of saving, it’s also about doing it in a smart way. So, let’s have a look at some strategies you can follow:
- Use regular savings first: Take money from regular investment or savings accounts before touching retirement accounts. That way, your 401(k) or IRA can keep growing without penalties.
- Roth IRA contributions: You can take out the money you put into a Roth IRA (not the profits it earned) anytime, with no taxes or penalties.
- Keep income low: If your income stays modest, you may qualify for subsidies under the Affordable Care Act. This can make health insurance much cheaper until Medicare starts at age 65.
- Earn a little on the side: Pick up flexible side jobs—like online tutoring, pet sitting, or selling crafts—that give you extra cash without locking you into a full-time job.
Could this change again?
FRA has almost reached 67, but lawmakers are debating on whether to raise or not. The idea is to make the FRA 68 or 69, but there’s nothing approved yet. However, this is a sign that the system will keep changing.
This is why experts insist on the idea of flexibility: having savings, additional sources of income, and using tax-efficient withdrawal strategies. This is the best way to be prepared for any adjustment coming from Social Security. Now that you know what you can do, will you try these strategies?