For decades, the traditional image of retirement has centered around reaching age 65, but that milestone is now largely symbolic.
Due to legislative changes, the full retirement age (FRA) for Social Security benefits has been gradually increasing, and for those born in 1959, it will reach 66 years and 10 months starting in 2025.
For individuals born in 1960 or later, the FRA is 67. While this shift may seem minor, it carries major implications for when and how Americans can claim their Social Security benefits.
Understanding these new rules is crucial to avoid benefit reductions and to plan a sustainable retirement strategy.
What Changed in Social Security’s Full Retirement Age?
The 1983 Social Security Amendments created a phased plan to increase the FRA from 65 to 67 over several decades. The rise has been happening in two-month increments per birth year.
| Birth Year | Full Retirement Age (FRA) |
|---|---|
| 1958 | 66 years 8 months |
| 1959 | 66 years 10 months |
| 1960 or later | 67 years |
This means that anyone born in 1959 will not receive full benefits until age 66 and 10 months in 2025. Those born in 1960 or later must wait until 67 to collect full retirement benefits.
The Cost of Early Retirement at 62
Claiming Social Security early at 62 remains an option, but comes with steep penalties.
- For those born in 1959, early filing results in about a 29% reduction in monthly benefits.
- For those born in 1960 or later, the reduction reaches 30%.
While claiming early may seem tempting, it locks in a permanent cut for life. This can significantly reduce long-term income, especially for those who live well beyond their 70s.
Why Delaying Past FRA Can Pay Off
On the flip side, delaying your claim past FRA can increase benefits by up to 8% per year until age 70. That’s a 32% boost if you wait from 67 to 70.
For example, if your FRA benefit is $2,000/month, waiting until 70 could raise it to $2,640/month. This strategy especially benefits individuals in good health with longer life expectancies, or higher earners looking to maximize survivor benefits for their spouse.
Bridging the Gap Before Full Retirement Age
If you want to retire before your FRA without hurting your long-term finances, consider these smart strategies:
1. Phased or Part-Time Retirement
Negotiate a reduced work schedule such as three or four days a week. Even 15 hours per week can cover basics like groceries or health insurance without touching retirement savings.
2. Build a Cash Runway
Aim to save 18–24 months of living expenses in a high-yield savings account or money market fund. This cushion allows you to cover costs without selling investments during market downturns.
3. Monetize Extra Space
Rent out unused space in your home or driveway. Room rentals can earn $700–$1,000/month, and driveway spots in busy cities can bring $150–$300/month.
4. Bridge Jobs with Benefits
Some retailers such as Costco, Home Depot, and Trader Joe’s offer part-time roles with medical benefits at 20–28 hours per week. This can provide income and health coverage until you reach FRA.
Tax-Smart Withdrawal Strategies for Early Retirement
Retiring early before claiming Social Security requires careful tax planning:
- Withdraw from taxable brokerage accounts first to avoid early withdrawal penalties on retirement accounts like IRAs or 401(k)s.
- Roth IRA contributions (not earnings) can be withdrawn tax- and penalty-free at any age.
- Keep your Modified Adjusted Gross Income (MAGI) low to qualify for Affordable Care Act (ACA) subsidies, saving thousands on health insurance before Medicare at 65.
- Consider side income like tutoring ($30–$50/hour), pet sitting, or selling crafts to generate low-stress income without full-time commitment.
Planning for Future Changes in Retirement Age
Although FRA is now set at 67 for those born in 1960 or later, lawmakers are discussing proposals to raise it to 68 or 69 in the future. No new laws have passed yet, but the debate signals a need for flexibility in retirement planning.
Building a cash reserve, maintaining part-time income streams, and using tax-efficient withdrawals will help you adapt if the FRA shifts higher. The best approach is to prepare early so you can retire when you want—not when the system dictates.
The shift from retirement at 65 to 67 and beyond has permanently changed the landscape of retirement planning. While the FRA increase to 66 years and 10 months for 1959-born workers and 67 for those born 1960+ may seem small, it greatly affects when and how you claim Social Security.
The key to thriving under this new system is flexibility: build a cash buffer, explore part-time income, plan tax-smart withdrawals, and weigh the benefits of delaying claims.
With preparation, you can retire on your terms and make the most of your Social Security benefits—even as the rules evolve.
FAQs
What is the new full retirement age for people born in 1959?
It is 66 years and 10 months, meaning they will reach full retirement age during late 2025 or 2026 depending on birth month.
What happens if I claim Social Security at 62?
You will receive a permanent benefit reduction—about 29% if born in 1959 and 30% if born in 1960 or later.
Can I still increase my benefit if I delay beyond 67?
Yes. You earn delayed retirement credits of about 8% per year until age 70, boosting your monthly benefit significantly.
