For decades, age 65 was the gold standard for American retirement. It was the default target for claiming Social Security and exiting the workforce. But that’s no longer the case. Starting in 2025, Americans born in 1959 will reach their Full Retirement Age (FRA) at 66 years and 10 months, and for those born in 1960 or later, it rises to 67. While the shift may seem minor, it has significant financial implications for millions of Americans—especially those aiming to retire early or relying heavily on Social Security for income.
Let’s unpack what these changes mean, how they affect your benefits, and how to prepare for a longer journey to full retirement.
Social Security’s Full Retirement Age Is Still Rising
The increasing FRA isn’t new. It stems from the 1983 Social Security Amendments, which gradually pushed the retirement age from 65 to 67 in response to longer life expectancies and financial pressure on the Social Security system.
Here’s how the new FRA schedule breaks down:
Full Retirement Age by Birth Year
| Birth Year | Full Retirement Age (FRA) |
|---|---|
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 or later | 67 years |
Early Retirement Comes at a Cost
Although you can start collecting Social Security benefits at age 62, doing so before your FRA results in permanent reductions to your monthly check.
Early Filing Penalties
- Born 1959: Approx. 29% reduction if claiming at 62
- Born 1960 or later: Approx. 30% reduction at 62
Delayed Retirement Bonuses
Waiting beyond your FRA increases your benefit by up to 8% per year, maxing out at age 70. This can boost your monthly payout by as much as 32%.
How to Bridge the Gap Before Full Retirement
If you’re planning to retire before reaching FRA, you’ll need a financial bridge. Here are practical strategies to close the income gap:
1. Phased Retirement
Negotiate a part-time or consulting role with your current employer. Working 15–25 hours per week can provide enough income to avoid tapping into savings too early.
2. Build a Cash Reserve
Save 18–24 months of expenses in a high-yield savings account or money market fund. This runway helps you stay afloat during early retirement without selling investments in a down market.
3. Monetize Idle Assets
| Asset | Monthly Income Estimate |
|---|---|
| Spare Room Rental | $700–$1,000 |
| Urban Driveway Lease | $150–$300 |
Small, creative income streams can supplement your retirement without draining principal investments.
4. Work Part-Time With Benefits
Some companies like Costco, Home Depot, or Trader Joe’s offer part-time roles with health insurance, which is especially useful for those retiring before Medicare eligibility at 65.
5. Use Tax-Efficient Withdrawal Strategies
Sequence your withdrawals to stretch your retirement savings:
- Start with taxable accounts to avoid early penalties
- Use Roth IRA contributions (not earnings) tax-free
- Keep your Modified Adjusted Gross Income (MAGI) low to qualify for ACA health subsidies
Supplement Your Income Creatively
Here are flexible, low-commitment income options:
- Tutoring: $30–$50 per hour
- Freelance or consulting work in your former field
- Online sales via Etsy, eBay, or Facebook Marketplace
- Pet sitting/dog walking through apps like Rover
- Seasonal or event-based jobs with local businesses
Not only do these provide income, but they also offer structure, purpose, and flexibility in early retirement.
Preparing for Future FRA Increases
The FRA increase to 67 is already law, but there’s political momentum to raise it further to 68 or even 69. While no legislation has passed yet, many proposals are being floated to address Social Security’s projected funding shortfalls.
How to Prepare:
- Build flexibility into your retirement timeline
- Increase emergency savings to adapt to unexpected changes
- Review your retirement plan regularly, especially as policy proposals evolve
The rise in full retirement age is more than a technical shift—it’s a paradigm change in how Americans must approach retirement planning. Whether you’re aiming to retire early or stretch your Social Security benefit, success comes down to flexibility, preparation, and strategic income planning.
Retirement isn’t just about hitting a certain age—it’s about aligning your finances, health coverage, and lifestyle so you can step away from work on your terms. With smart planning, you can do just that—even as the FRA moves further out of reach.
FAQs:
What is the new full retirement age for people born in 1959?
It’s 66 years and 10 months, starting in 2025.
Can I still claim Social Security at 62?
Yes, but your monthly benefit will be reduced by up to 30% depending on your birth year.
What’s the maximum age to delay benefits?
Age 70. After that, there’s no increase in benefits for waiting longer.
