As the new year rolls in, it brings important updates to Social Security that could mean more money in your pocket. If you’re preparing for retirement or currently receiving benefits, here’s everything you need to know.
1. Full Retirement Age (FRA)
- The full retirement age (FRA) to collect your Social Security benefits remains at 67 for individuals born in 1960 or later.
- Claiming at FRA allows you to receive your full monthly benefit, which could average $4,018 depending on your career earnings.
- Important Note: Your benefit amount is calculated based on your lifetime earnings, so higher earnings generally result in higher benefits. Periods of unemployment or lower wages will lower your total benefit.
2. Early vs. Delayed Retirement
- Early Retirement (Age 62):
- You can start collecting benefits as early as age 62.
- However, your monthly payment will decrease—averaging around $2,831 (assuming steady employment since age 22).
- Delayed Retirement (Beyond Age 67):
- If you choose to delay benefits, your monthly amount increases each year until age 70.
- At age 70, the maximum benefit you could receive is $5,108 per month.
Tip: Delaying benefits may be worth considering if you have a longer life expectancy or additional income sources during early retirement.
3. Cost-of-Living Adjustment (COLA)
- For 2025, Social Security recipients will see a 2.5% COLA increase to account for inflation.
- The updated payments will be reflected in January 2025 checks.
- This adjustment benefits nearly 68 million Americans receiving Social Security.
4. How to Claim Social Security Benefits
You can apply for Social Security benefits online or through your local Social Security office. Here’s what you’ll need to get started:
- Social Security number
- Birth certificate
- W-2 forms or self-employment tax returns from the previous year
Pro Tip: Be aware that Social Security benefits may be taxable depending on your income level.
Key Highlights for 2025
- FRA Benefits: Average $4,018 for those born in 1960 or later.
- Early Retirement Benefits: Average $2,831 at age 62.
- Maximum Delayed Benefits: Reach $5,108 per month at age 70.
- COLA Increase: A 2.5% bump starting January 2025.
Planning for Social Security is crucial to maximizing your retirement income. By understanding these updates and timing your claims strategically, you can make the most out of your benefits.
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