By When you’ve worked for many years, it’s unsurprising that retirement feels like the pot of gold at the end of the rainbow. However, those planning to retire at age 65 may need to reevaluate their current plan as Social Security is raising the retirement age this year. Why is it changing, and are there other shifts people should know about the program? To answer these questions and prepare you for your future, we turned to the financial experts.
Why is Social Security raising the retirement age in 2025?
In 2025, the full retirement age (FRA) for Social Security will continue to increase based on the gradual phase-in set by previous legislation. What does that mean for those who want to retire? “For individuals born in 1960 or later, the FRA is 67,” says Rachel Gustafson, CFP, CCPS, investment advisor representative at Financial Investment Team. “If you’re turning 65 in 2025, you’ll need to wait two more years to receive full benefits.”
She suggests planning accordingly because if you retire before FRA, it will result in permanently reduced benefits. Adjustments, including working longer, increasing your savings or relying on other forms of retirement income, are not only recommended but may be necessary.
“For women, who statistically live longer than men and are more likely to rely on Social Security for a larger portion of their retirement income, the increased FRA means more years of working or a greater need for careful financial planning,” adds Gustafson.
While this change is not necessarily new, those approaching what they thought was retirement age might be caught off guard. “In 1983, Congress passed a law to gradually raise the retirement age from 65 to 67, starting with people born in 1938 or later,” explains Mollie Felt, CFP, senior wealth management associate at Greenleaf Trust. So, “the retirement age has increased a few months every birth year until it reached 67.”
Social Security implemented this change due to longer life expectancies and to help ensure the program’s financial stability. Since the FRA has gradually increased to 67, it will remain there for now.
Other Social Security changes this year
A few other changes have gone/will go into effect in 2025. These include:
A cost of living increase
Besides an increase in the FRA, a 2.5 per cost of living adjustment was applied to Social Security benefits, which began in January 2025. “This is an increase in benefits to keep pace with inflation, but it’s the smallest one since 2020,” says Larry Sprung, CFP, author of Financial Planning Made Personal and founder of Mitlin Financial.
Maximum taxable earnings increase
Felt shares that any taxable earnings subject to the Social Security tax will rise from $168,600 to $176,100. “This means that any income exceeding $176,100 will not be subject to Social Security tax,” she says.
According to the Internal Revenue Service, Social Security tax is 12.4 percent for self-employed individuals or 6.2 percent for employees and employers, each paying half the total.
Elimination of certain programs
Recently, the Social Security Fairness Act passed legislation to eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), “which reduced benefits for over three million workers in the public sector,” says Sprung. “Those affected and who receive reduced benefits due to these provisions will receive retroactive benefits back to January 2024 and will begin to see higher monthly checks from Social Security.”
How to maximize your Social Security benefits
Gustafson says it’s important to know how to maximize your Social Security benefits. Some information to know:
- Spousal and survivor benefits: If you were married for at least 10 years, you may be eligible for benefits based on your ex-spouse’s earnings.
- Delaying benefits: Waiting until age 70 to claim Social Security can significantly increase your monthly payments. For married couples, Gustafson typically recommends that at least one spouse—preferably the one with the higher benefit—delay claiming until 70 to maximize lifetime income.
- Earnings and benefit reductions: If you work while claiming benefits before FRA, your Social Security payments may be temporarily reduced.
“Since Social Security is only one part of a retirement plan, it’s essential to consider other sources of income, such as 401(k) plans, IRAs, annuities and other investments,” she says.
