Social Security’s Full Retirement Age (FRA) is the guiding factor when it comes to retirement for most Americans.
For people born in 1960 and later, the FRA remained stagnant at 67. However, come August 1, 2025, the Social Security Administration will begin to make modifications.
Due to longer life expectancies and a more conservative projection of the trust fund, FRA increases will now be implemented.
The FRA will gradually increase by 2 months for each year of birth after 1962 and will reach a cap of 68 for those born in or after 1968.
Social Security’s FRA increase policy is justified by the fact that Americans are receiving benefits for a longer period of time while the young workforce is shrinking, reducing the number of payroll-tax contributors.
By gradually increasing the FRA, the policy motivates people to work and pay longer, improving the program’s finances without significant cuts to benefits. There are concerns, however, that these policies disproportionately harm those in manual labor or with chronic conditions who are unable to work after reaching their late 60s.
What It Means for Your Benefits
To summarize the previous policy, claiming full benefits at the age of 67 allowed people to claim benefits without penalties or delays. For those born in 1963, FRA increases to 67 years 4 months. For those born in 1967, it jumps to a full 68 years. Choosing early retirement benefits at 62 will continue to reduce the monthly check. Additionally, the check will be permanently reduced for life.
To continue with the example of someone born in 1965, Sara sees an FRA increase of 67 to 67 years 8 months. Stopping work at 62 results in permanently reduced benefits. However, waiting until full retirement age will see a monthly check bump. Workers with high earnings will see an increase in overall benefits. Further, those months of work will increase Social Security, as well as years of savings for 401k and IRA accounts.
Here’s Why You Should Wait For Social Security 2025 Hike
By planning for these additional months now, you safeguard your retirement income and many issues further down the line.