Starting in 2025, individuals born in 1959 will have to wait until they are 66 years and 10 months to claim full Social Security retirement benefits. While it may appear to be a small adjustment, the change plays a major role in determining how much monthly income retirees will receive.
This shift is part of the 1983 Social Security Amendments, which gradually increased the FRA from 65 to 67 in two-month increments to help keep the program solvent.
A Look at the Timeline and Future Changes
Those born in 1958 reached full retirement at 66 years and 8 months. Now, the 1959 cohort will need to wait two more months. And if you were born in 1960 or later, your full retirement age will be a full 67 years.
While Congress hasn’t passed any new legislation yet, some proposals aim to increase the FRA even further, possibly to age 68 or 69, due to financial pressure on the Social Security system.
Early Retirement Comes at a Cost
Although Americans can still claim benefits at age 62, doing so comes with a permanent reduction. For those born in 1959, claiming early will result in a 29% cut, and for those born in 1960 or after, it increases to 30%.
By contrast, delaying benefits beyond your FRA can increase your monthly check by 8% per year, up to 32% extra if you wait until age 70.
Bridging the Gap Between Early Retirement and Full Benefits
If you’re planning to retire before reaching your FRA, there are smart ways to fill the financial gap without returning to full-time work:
Phased Retirement
Negotiate a reduced work schedule—perhaps 3–4 days a week. Even working 15 hours weekly can help cover healthcare and essential bills while protecting your savings.
Build a Cash Runway
Experts recommend saving enough to cover 18 to 24 months of living expenses. Store these funds in a high-yield savings or money-market account, ensuring quick access without withdrawing from long-term investments during a market dip.
Rent Out Extra Space
If you have an unused bedroom or driveway, consider long-term rentals. Room rentals can earn $700 to $1,000 per month, and urban driveway spots can generate $150 to $300.
Take Bridge Jobs with Benefits
Companies like Costco, Trader Joe’s, and Home Depot offer part-time jobs with healthcare benefits to employees working 20–28 hours per week, giving you an income buffer while preserving access to coverage.
Smart Tax and Withdrawal Strategies for Early Retirees
If you’re retiring before reaching FRA, you can use tax-efficient withdrawal methods to stretch your savings further:
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Start with Taxable Accounts
Withdraw from taxable brokerage accounts first. This lets your 401(k) and IRA accounts keep growing tax-deferred.
Use Roth IRA Contributions
You can withdraw your Roth IRA contributions (not earnings) tax- and penalty-free at any age. This offers flexibility without triggering taxes or penalties.
Keep Income Low for ACA Subsidies
By managing your Modified Adjusted Gross Income (MAGI) carefully, you may qualify for Affordable Care Act (ACA) subsidies, significantly lowering your health insurance premiums before reaching Medicare eligibility at 65.
Side Gigs for Extra Cash
Light side work like online tutoring ($30–$50/hour), pet sitting, or selling crafts on platforms like Etsy can generate supplemental income without full-time pressure.
Preparing for a Potential Increase to FRA 69
Social Security is facing serious financial strain, with the trust fund projected to be depleted by 2034. If Congress doesn’t act, benefits may be cut to 81% of promised levels.
One potential solution under debate is to raise the FRA to 69 between 2026 and 2033. This change would affect millions of Americans currently aged 30–55. Critics warn this could disproportionately impact workers in physically demanding jobs or those with shorter life expectancies.
How to Stay Ahead of the Changes
The best way to navigate these shifts is to build a flexible, resilient retirement plan. Here’s how to prepare:
- Use SSA Tools: The retirement age calculator and My Social Security account offer personalized estimates to help you model various scenarios.
- Create Backup Income Streams: Part-time work, side gigs, and rental income can offer reliable cash flow.
- Diversify Withdrawals: Understand when and how to tap Roth, taxable, and traditional accounts to reduce taxes and penalties.
- Stay Informed: Monitor policy updates and consider consulting a financial planner who specializes in retirement strategy.
Why Retirement Planning Is More Complex Than Ever
The rising FRA is only one of the challenges retirees face. Other factors, such as healthcare costs, inflation, and potential benefit cuts, make advanced planning a necessity.
While the recent tax relief under the Trump administration helped reduce short-term burdens, it doesn’t fully resolve the structural issues in the Social Security system.
In a time of economic uncertainty and policy shifts, the most successful retirees will be those who:
- Remain flexible
- Diversify income sources
- Use tax-efficient strategies
- Monitor and adjust their plans regularly
FAQs
Q1. What is the new full retirement age for Social Security in 2025?
For people born in 1959, the FRA increases to 66 years and 10 months in 2025. For those born in 1960 or later, it will be 67.
Q2. Can I still claim Social Security at 62?
Yes, but you’ll receive only 70–71% of your full benefit. Your benefit amount increases the longer you delay, up to age 70.
Q3. Why is the FRA increasing?
It’s rising due to longer life expectancies and the need to sustain Social Security’s solvency.
Q4. What steps should I take to prepare for the new retirement age?
Start with cash savings for 18–24 months, explore part-time jobs with benefits, and use tax-smart withdrawal strategies from your retirement accounts.
