2025 will bring changes for all social security beneficiaries. The first has to do with the adjustment of the cost of living (COLA) carried out by the institution, and modifies the amounts to be received. This year’s increase has been 2.5%, and will be reflected in the coverage quarter, that is, the payment that contributors receive for each social security credit. On the other hand, the retirement age is another of the most important factors for society as a whole in the United States.
In this sense, contributors who have reached 62 years of age will now be able to opt for retirement, but with a lower pension. Therefore, it follows that the longer a person waits to apply, the higher their benefit will be. Thus, according to the institutions, if you postpone taking your benefits from your full retirement age until you are 70, the amount of your benefit will increase significantly. The full retirement age, meanwhile, set for 2024, has been 66 years and eight months. This corresponds to those 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 start receiving benefits up to four months before the date they are due. Therefore, for this year only those born in 1958 and the first two months of 1959, in addition to previous years, will be able to start drawing their retirement in 2025 without being penalized. Those born in 1960 will not reach full retirement age until they are 67 years old.
On the other hand, if their spouse has died, they will be entitled to receive survivor benefits from the age of 60, or at the age of 50 if they are disabled. Also at 65 years of age you will be entitled to receive Medicare, both for the insurance that covers hospitalizations (part A), and for the one that includes medical consultations (part B). Therefore, 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 has a calculation to determine how much your monthly payments will be permanently reduced according to the years you have contributed and what you stopped contributing before reaching full retirement age. In this way, it is already known that if a person retires before the full retirement age, it will lead to a series of reductions in their monthly income from this benefit.
During the first 36 months, for each month that a beneficiary registers to receive social security before reaching 100% of their contributions, the amount of the primary insurance will be reduced by just over 1%, that is, around 0.55%. After these 36 months, the reduction is slightly lower: 0.42%.
In this sense, a person born in 1960 or later who decides to retire at the age of 62 will, in the first month in which they meet the requirements to start receiving social security benefits, be 60 months short of reaching full retirement age, and will have made 30% fewer contributions. This reality will permanently reduce their retirement pension.