Goodbye to retirement age of 66 years and 8 months: Here is the new retirement age from Jan. 1, 2025

The new year will bring a series of changes to Social Security. Every year the Social Security Administration announces a cost-of-living adjustment (COLA) which applies to beneficiaries’ payments starting with the disbursement that corresponds to January.

The increase this year was 2.5% which will also raise the amount contributors must earn for each Social Security credit, also known as a “quarter of coverage,” as well as the wage cap for Social Security taxes. Furthermore, beneficiaries will have to wait a little longer to reach full retirement age.

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What is the new retirement age from January 1, 2025?

The earliest you can begin claiming retirement payments from the Social Security Administration (SSA) is once you’ve turned 62, but that will reduce you benefit amount by 30%. In 2024, those Americans who celebrated their 66-and-eighth-month birthday finally reached full retirement age. That’s when Social Security recipients can claim their full Old-Age benefits.

These people were born in 1958. However, those who were born a year later will have to wait until they are 66 and 10 months old, meaning only those born in the first two months of 1959 will be able to claim full benefits in 2025 without being penalized besides all who were born in earlier years.

All those who were born in 1960 and later won’t reach full retirement age until they turn 67. Note, people born on January 1 of any year, The SSA says they should refer to the previous year.

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The SSA allows Americans to apply for benefits up to 4 months before they plan to receive them. So, if you are thinking about claiming retirement benefits soon, even if still not yet ready to do so, it is recommended that you visit the SSA website on retirement benefits.

How to calculate the Social Security early retirement penalty

The Social Security Administration has a calculation for just how much your monthly Social Security payments will be permanently reduced from the primary insurance amount accumulated over the years you contributed depending on just how early you retire.

During the first 36 months, for every month that a beneficiary signs up to receive Social Security prior to full retirement age the primary insurance amount will be reduced by 5/9 of 1 percent, or around 0.55 percent. For each additional month beyond 36 months, the reduction is 5/12 of one percent, or a little less than 0.42 percent.

A person who was born in 1960 or later and that retires at 62 in the first month they eligible to begin receiving Social Security benefits will be 60 months short of full retirement age. That translates to a 30 percent permanent reduction to compensate for the extended number of months it is expected they’ll be collecting monthly payments.

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