All social security beneficiaries will face changes in 2025. The first relates to the institution’s adjustment of the cost of living (COLA), which modifies the amounts to be received.
This year’s increase was 2.5% and will be reflected in the coverage quarter, which is the payment made to contributors for each social security credit. On the other hand, the retirement age is one of the most important factors for society in the United States.
In this sense, contributors over the age of 62 will be able to retire, albeit with a lower pension. As a result, the longer a person waits to apply, the more benefit they will receive.
Thus, according to the institutions, deferring your benefits from your full retirement age until you reach 70 will result in a significant increase in your benefit.
Meanwhile, the full retirement age has been set for 2024 at 66 years and eight months. This applies to individuals born in 1958 and the first two months of 1959.
Social Security payments in the United States
The US Social Security Administration (SSA) allows Americans to begin receiving benefits up to four months before their due date. As a result, only those born in 1958 and the first two months of 1959, as well as previous years, will be eligible to begin drawing retirement benefits in 2025 without penalty. Those born in 1960 will not reach the full retirement age until they are 67 years old.
If their spouse dies, they will be entitled to survivor benefits beginning at the age of 60, or 50 if they are disabled. At the age of 65, you will also be eligible for Medicare, both for hospitalizations (part A) and medical consultations (part B). Thus, according to the SSA, the following conditions are deducted with a view to retirement:
- If you were born on January 1st, you should refer to the previous year.
- If you were born on the 1st of the month, we calculate your benefit (and your full retirement age) as if your birthday was the previous month. If you were born on January 1st, we calculate your benefit (and your full retirement age) as if your birthday was in December of the previous year.
- You must be at least 62 years old for the full month to receive benefits.
- Percentages are approximate due to rounding.
- The maximum benefit for the spouse is 50% of the benefit that the worker receives at full retirement age. The reduction percentage for the spouse should be applied after the automatic 50% reduction. The percentages are approximate due to rounding.
Penalty for early retirement
The Social Security Administration uses a calculation to determine how much your monthly payments will be permanently reduced based on the number of years you have contributed and how much you stopped contributing before reaching full retirement age.
In this way, it is already known that retiring before the full retirement age will result in a series of reductions in monthly income from this benefit.
During the first 36 months, for each month that a beneficiary registers for social security before reaching 100% of their contributions, the amount of primary insurance is reduced by slightly more than 1%, or approximately 0.55%. After 36 months, the reduction is slightly lower at 0.42%.
In this sense, a person born in 1960 or later who decides to retire at the age of 62 will be 60 months short of full retirement age in the first month after meeting the requirements to begin receiving social security benefits, and will have contributed 30% less. This reality will result in a permanent reduction in their retirement pension.
