If you’re planning for retirement there’s an important update you should know. Starting in 2025, the government’s Social Security rules are changing, including adjustments to change the retirement age and benefits.
While you can still begin collecting Social Security at 62, waiting longer will increase your monthly payments. If you were born in 1960 or later, your full retirement age is now 67. These changes aim to maintain the program’s stability but could affect when and how much you receive. Understanding these updates will help you make informed retirement decisions.
What are the New Changes the Retirement Age Forever?
Many Americans think of 65 as the typical retirement age. While you can start collecting Social Security at 62, waiting longer increases your benefits. Previously, full retirement age (FRA) was 65, but for those born in 1960 or later, it has gradually increased to 67.
In 2025, the FRA for people born in 1959 will be 66 years and eight months. If you were born in 1960, your FRA is now officially 67. However, if you claim benefits earlier, you’ll receive a lower amount. To see how your benefits may vary based on when you retire, check out Social Security Benefits by Retirement Age: How Much Will You Get?.
How Early Retirement Affects Your Benefits?
If you decide to retire before reaching your FRA, your monthly Social Security payments will be permanently reduced. The Social Security Administration (SSA) uses a formula to calculate this reduction:
| Years Before FRA | Monthly Reduction (%) | Total Reduction (%) |
| First 36 months | 0.55% per month | 19.8% |
| Beyond 36 months | 0.42% per month | Up to 30% |
For example, if you were born in 1960 and retire at 62 instead of 67, your benefits will be reduced by about 30% for life.
Can You Work and Still Collect Benefits?
Yes! If you start collecting Social Security while still working, your benefits won’t be reduced due to your extra income. However, if you claim early retirement while working, there are income limits to keep in mind. The SSA allows you to apply for benefits up to four months before you wish to start receiving them.
Other Important Retirement Benefits
Survivor Benefits – If your spouse has passed away, you may be eligible for survivor benefits starting at age 60, or age 50 if you have a disability.
Medicare Enrollment – Once you turn 65, you qualify for Medicare, which includes hospital insurance (Part A) and medical insurance (Part B).
Cost-of-Living Adjustment (COLA) – In 2025, Social Security payments will increase by 2.5% to help retirees keep up with inflation. If you want to understand how this change influences your retirement funds, read more about The Impact of the 2025 COLA on Retirement Payments.
States That Won’t Tax Your Social Security Benefits in 2025
Some states have tax policies that make retirement more affordable. If you live in one of these states, your Social Security benefits won’t be taxed:
Illinois – Retirement income from Social Security, pensions, and 401(k) plans is tax-free.
Iowa – Residents over 55 don’t pay taxes on Social Security, 401(k), or IRA withdrawals.
Mississippi – Social Security and other retirement income are not taxed if certain conditions are met.
Pennsylvania – Social Security, IRA, and 401(k) withdrawals are tax-free, but wages from employment are taxed.
FAQs
1. Can I still retire at 62?
Yes, but your benefits will be permanently reduced. The longer you wait, the higher your monthly payment.
2. How can I apply for Social Security benefits?
You can apply online through the SSA website or visit a local Social Security office. Applications can be submitted up to four months before you want benefits to start.
3. Will my benefits increase if I work past my full retirement age?
Yes! Each year you delay collecting Social Security past your FRA, your benefits increase by about 8% until you reach 70.