Goodbye to Retirement at 67 – the new age for collecting Social Security changes everything in the United States

For a long time, retirement in the United States meant the age of 65, when people could enjoy their years of hard-earned money and live a comfortable life. But circumstances have changed over time, and the Social Security Full Retirement Age (FRA) has gradually increased. For those born in 1959, this new retirement age will be 66 years and 10 months by 2025.

While this change seems to be only two months, its impact on your retirement planning and Social Security benefit collection strategy can be significant. It is important for every American to understand how this change will affect their financial future and to plan ahead.

Changes to the Social Security Full Retirement Age

Under the Social Security Amendments of 1983, the FRA was gradually increased from 65 to 67. This change was implemented in two-month intervals. Those born in 1959 will be eligible for full retirement by 2025, at age 66 years and 10 months. For those born in 1960 or later, FRA will be 67 years.

This means that those who were planning to retire at age 66 years and 8 months will now have to wait two more months. If someone chooses to retire before FRA, for example, at age 62, their monthly benefit could be reduced by approximately 29%. Claiming after FRA increases benefits by 8% per year, and if you wait until age 70, the maximum benefit increase can be up to 32%.

How to bridge the gap between early retirement and full benefits?

If you want to retire before FRA, some strategies may prove helpful.

1. Phased Retirement

• Working a three- or four-day week can be a good option. A part-time job of just 15 hours per week can help cover your health insurance and everyday expenses.

2. Cash Runway

• Maintaining financial security is crucial. Experts recommend saving 18–24 months’ worth of expenses. Keep this in a high-yield savings account or money market account so you don’t have to sell investments.

3. Income from Extra Space

• If you have a spare room or driveway in your home, rent it out. Renting a room long-term can generate $700–$1,000 per month, and driveway parking can generate $150–$300 in additional income.

4. Benefits of Part-Time Jobs

• Some retail companies, such as Costco, Home Depot, and Trader Joe’s, offer medical benefits to employees who work 20–28 hours per week. This will provide you with income as well as health insurance.

Tax and Withdrawal Strategies for Early Retirement

You can ease the financial pressure during early retirement with some tax-smart measures:

• Withdrawal from a Taxable Account: Let your IRA or 401(k) account grow and withdraw when needed.
• Withdrawal from a Roth IRA: Contributions can be withdrawn tax-free and penalty-free at any time.
• Keep a Low Modified Adjusted Gross Income: This will keep you eligible for Affordable Care Act subsidies.
• Side Income: Generate income through alternatives like online tutoring, pet sitting, or selling handicrafts.

These measures can provide additional income without the stress of a full-time job.

Potential Changes to the Retirement Age in the Future

Although the proposal to raise the FRA from 65 to 67 is nearly complete, legal debate is still ongoing over whether to extend it to 68 or 69. Due to the financial strain on the Social Security system, it is estimated that if the trust fund is exhausted by 2034, benefits will be limited to only 81%. Therefore, legislators have begun considering options such as increasing payroll taxes or further raising the FRA.

This change could take effect between 2026 and 2033 and would affect millions of Americans aged 30–55. Those with physically demanding jobs or shorter life expectancies will see a greater impact.

How to Prepare?

• Build a Cash Reserve: Ensure financial security for unexpected circumstances.
• Part-Time Income: Consider a part-time job for health insurance and income.
• Tax-Smart Withdrawal: Control taxes and let investments grow.
• Flexible Retirement Planning: Maintain Flexibility for Future Changes.

By logging into the Social Security Administration’s My Social Security account, you can monitor your retirement planning, benefit calculations, and future changes.

Conclusion

With Social Security’s FRA increasing to 66 years and 10 months starting in 2025, retirement planning has become more challenging than ever. Even though this change is only two months, it demonstrates the importance of precise planning, flexibility, and financial understanding.

• Build a cash reserve.
• Consider a part-time or bridge job.
• Implement tax and investment strategies wisely.

This way, you’ll retire when you’re ready, not just according to government regulations. Retirement in America is no longer just a matter of age but the result of smart financial decisions, flexibility, and future planning.

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