Social Security is facing significant changes that could impact future retirees, especially those planning to retire in 2025. Understanding these changes is crucial for making informed decisions about retirement timing. Here’s what you need to know:
Reduced Cost of Living Adjustment (COLA)
Starting in 2025, retirees can expect a reduced annual Cost of Living Adjustment (COLA). According to lagradaonline, the Social Security Administration (SSA) has recently revised its COLA projection for 2025 to 2.63%, a drop from previous years’ increases. This downward trend in COLA could mean lower annual increases in Social Security benefits, affecting retirees’ purchasing power over time.
Rising Full Retirement Age (FRA)
The Full Retirement Age (FRA) for Social Security benefits is gradually increasing. For individuals born after 1960, the FRA will rise to 67. This change means that those retiring later will have to wait longer to receive their full benefit amount. For instance, those turning 66 in 2025 will reach their FRA at 66 years and 10 months, up from 66 years and 8 months for those born in 1958.
Strategic Retirement Planning
Given the anticipated reduction in COLA and the increase in FRA, 2024 may be a strategic year to retire. Retiring before these changes take effect could secure higher benefit amounts and provide greater financial stability. Financial advisors recommend considering retirement in 2024 to lock in current benefits and avoid potential reductions.
For those nearing retirement, these upcoming changes highlight the importance of planning ahead. Retiring now might offer a more secure financial future in light of these Social Security adjustments.
