For decades, Americans viewed age 65 as the golden number for retirement. But that traditional idea is quickly fading. Starting in 2025, the Full Retirement Age (FRA) for people born in 1959 will increase to 66 years and 10 months, and for those born in 1960 or later, it will reach 67.
While this change might look minor — just two extra months — it carries serious consequences for retirement timing, income, and taxes. Understanding what this shift means can help you plan smarter and retire confidently.
Social Security’s New Full Retirement Age
Under the Social Security Amendments of 1983, the FRA was gradually raised from 65 to 67. This rollout continues in 2025:
| Year of Birth | Full Retirement Age (FRA) |
|---|---|
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 or later | 67 years |
- Retiring early (at 62) will cut benefits by 29–30%.
- Delaying benefits until 70 can increase payments by up to 32%.
That means timing matters more than ever. A few months’ difference could affect your lifetime income significantly.
Smart Strategies for Early Retirees
If you’d rather retire early — before reaching your FRA — consider these strategies to fill the income gap:
1. Try Phased Retirement
Work part-time (15–25 hours/week) before fully retiring. Many employers allow reduced schedules that still offer steady income and health benefits.
2. Keep a Solid Cash Reserve
Save enough to cover 18–24 months of living expenses in a high-yield savings account. This buffer can protect your investments from early withdrawals.
3. Rent Out Extra Space
Earn extra income by renting an unused room, basement, or parking space.
- Spare room: $700–$1,000/month
- Driveway or garage: $150–$300/month
4. Find Part-Time Jobs with Benefits
Some major companies — including Costco, Home Depot, and Trader Joe’s — offer part-time roles with health insurance and retirement benefits.
Tax Planning and Smart Withdrawals
Taxes can quietly drain your savings if you’re not careful. Use these strategies to stretch your money further:
1. Withdraw from Taxable Accounts First
Use funds from brokerage accounts before dipping into 401(k)s or IRAs to avoid early withdrawal penalties.
2. Leverage Roth IRA Withdrawals
Withdraw your contributions (not earnings) from a Roth IRA anytime, tax- and penalty-free — ideal for early retirees.
3. Keep Your MAGI Low
A lower Modified Adjusted Gross Income (MAGI) may qualify you for Affordable Care Act (ACA) subsidies, saving thousands in health premiums.
4. Explore Side Income Options
Light, flexible work — like freelancing, online tutoring, or pet sitting — can supplement your retirement income without full-time stress.
Will the Retirement Age Rise Again?
Experts warn that the Social Security Trust Fund may be depleted by 2034, leaving only 81% of benefits available. Policymakers are already debating whether to raise the FRA to 68 or 69 to offset shortfalls.
That’s why it’s crucial to create a flexible retirement plan with:
- Cash savings
- Tax-efficient investments
- Multiple income sources
Why Smart Planning Matters
Retirement is no longer about reaching a specific age — it’s about being financially ready. Whether the FRA is 65, 67, or 69, a solid plan will keep you secure and independent.
Quick Tips
- Build a healthy emergency fund.
- Consider phased or part-time work.
- Diversify income sources.
- Use tax-efficient withdrawal strategies.
Conclusion
The new Social Security age rules mark a turning point in how Americans retire. With careful planning — focusing on savings, taxes, and flexible income — you can still enjoy a comfortable and confident retirement. The key is to start preparing now, so policy changes don’t catch you by surprise.
FAQs
Q1. What is the Full Retirement Age (FRA) for people born in 1959?
A. It’s 66 years and 10 months, starting in 2025.
Q2. What will be the FRA for those born in 1960 or later?
A. It will be 67 years.
Q3. How much are Social Security benefits reduced if you retire at 62?
A. About 29–30%, depending on your birth year.
Q4. Can I still work while receiving Social Security?
A. Yes, but your benefits may be temporarily reduced if you earn above the annual limit before reaching FRA.
Q5. How can I increase my Social Security payments?
A. Delay claiming benefits until age 70 to receive up to 8% more per year beyond your FRA.