How to Prepare for your 2025 Social Security Payments Today
If you are in your retirement years and rely on Social Security payments, waiting to learn what the cost of living adjustment (COLA) will be each...
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Whether you will be retiring in 2025, or years from now, a little planning goes a long way toward setting you up for success in your golden years. One key is understanding your Social Security benefits. When you can receive them, and how much you should expect, will change as the program is adjusted. The first thing you want to know is when you can claim your benefits:
Understanding when you will reach full retirement age is crucial, even though it’s not the most common age at which people choose to claim Social Security benefits. For many, claiming benefits before full retirement age results in reduced payments, but it still serves as a reference point for calculating how much you’ll receive at different ages.
For instance, if you were born in 1960 or later and choose to claim Social Security at age 62, you’ll face a 30% reduction in benefits. This reduction is calculated as 0.55% per month for the first 36 months, followed by a smaller 0.42% reduction for each additional month. By the time you’re 60 months ahead of your full retirement age, your benefits will be reduced by the maximum amount of 30%.
Despite this, age 62 remains a popular age for claiming benefits, even if it means continuing to work. Another factor contributing to this decision is age 65, which remains significant as the age when workers become eligible for Medicare. Since healthcare costs are a major concern for retirees, the availability of Medicare makes it appealing for some individuals to retire at this age, especially since the reduction in benefits isn’t as steep, leaving retirees with about 87% of their full benefit.
For those who can afford to wait, Social Security benefits can be claimed later, after full retirement age. By waiting until age 70, individuals can receive up to 124% of their full benefits. However, this option is typically chosen by a minority who either can afford to delay claiming or prefer to continue working to maximize their future benefit.
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In 2024, an average of almost 68 million Americans received a social security check each month. As the U.S. population ages, that number will increase. A financial advisor will tell you not to rely on this as your sole source of retirement income. Having a comprehensive plan for saving funds is the best approach.
The content on this site is intended for informational purposes only and should not be considered accounting, legal, tax, or financial advice. First Federal Bank recommends that customers conduct their own research and consult with professional legal and financial advisors before making any financial decisions. Links to third-party websites may be provided for your convenience; however, First Federal Bank does not guarantee the reliability, accuracy, or safety of the information, products, or services offered on these external sites. We are not liable for any damages resulting from the use of these links, and we do not investigate, verify, or endorse the content or opinions expressed on any third-party sites. First Federal Bank | Equal Housing Lender | NMLS # 408902
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