Ramsey Solutions personality Jed Warshaw explains how to get the most from your Social Security check and more on ‘The Bottom Line.’
of social security”full retirement age“It’s going to increase next year, meaning people who are close to retirement will have to wait a little longer before claiming bigger benefits.
The full retirement age (FRA) for Social Security was 65 when the program was created in the 1930s, but reforms in 1983 gradually raised the FRA in two-month increments over a 22-year period, from 65 to 67. Done for those who started. Who turned 62 in 2000.
Next year, the FRA will increase to 66 years and 10 months for people born in 1959. They will begin qualifying for their full Social Security benefits starting in November 2025.
Retirees can start their own collection social security benefits Before reaching FRA, the minimum age to do so is 62 years. However, retirees who claim early may have their monthly benefits permanently reduced by up to 30%, depending on how early they claim.
Why some Americans will receive extra Social Security checks in November
Social Security’s full retirement age will increase to 66 years and 10 months in 2025. (Kevin Dietsch/Getty Images)
Americans can also delay claiming Social Security benefits and be rewarded for doing so, as the program offers a bonus of up to 8% for waiting until the age when they are eligible to receive maximum benefits. Are there.
The FRA increase coming in 2025 is the next-to-last age change that will occur under social security reform This law was enacted in 1983, although it may change with future reforms.
The final change will apply to workers born in or after 1960 and will require those workers to wait until age 67 to receive FRA, meaning a worker born in 1960 will be eligible to receive benefits until their birth month in 2027. Will have to wait to claim. So that they can get full benefit.
Social Security crisis: CRFB says beneficiaries face 21% cut in benefits without reforms
Social Security’s finances have become strained as the US population ages. (iStock)
social Security Recipients are on track to receive a 2.5% cost-of-living adjustment (COLA) to their benefits next year, taking into account inflation. COLA increases benefits to take into account rising prices of goods in the economy so that retirees do not see their purchasing power diminish over time.
The 2.5% COLA is the smallest since 2021 and comes as inflation in the U.S. economy has moderated over the past two years after reaching the highest level in four decades in 2022, although prices remain high and household budgets remain under pressure. Are putting pressure.
The new COLA will take effect for most Social Security recipients when they receive benefit distributions in January.
Social Security cost of living adjustment will be 2.5% in 2025, down from last year
Social Security beneficiaries are scheduled to receive a 2.5% COLA for 2025. (William Thomas Cain/Getty Images)
Social Security benefits are largely underfunded payroll taxes receipts, although it depends to some extent on the trust fund to pay benefits that are not covered by incoming tax receipts.
The aging of the U.S. population and the declining ratio of workers to retirees due to retirement among members of the Baby Boomer generation have put pressure on the program’s finances, pushing toward bankruptcy.
Social Security’s primary trust fund, the Old-Age and Survivors Insurance Trust Fund, is projected to expire in 2033, leading to a 21% deficit across the board. profit cutAccording to the non-partisan Committee for a Responsible Federal Budget (CRFB).
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According to the CRFB, this would result in a $16,500 reduction in nominal benefits for a typical dual-income couple who retired at the time of the trust fund deficit, or a $12,400 reduction for a typical single-income couple.
