Jade Warshaw of Ramsey Solutions explains how to use your Social Security check and more on “The Bottom Line.”
social securityFull retirement age“It's set to increase next year, meaning those approaching retirement will have to wait a little longer before they can claim more benefits.
The full retirement age (FRA) for Social Security was 65 when the program was created in the 1930s, but reforms in 1983 gradually raised the FRA from age 65 to 67 over a 22-year period for which it started who was 62 years old in 2000.
Next year, the FRA will increase to 66 years and 10 months for those born in 1959. They will be eligible to receive their full Social Security benefits starting in November 2025.
Retirees can start collecting on their own Social Security benefits Before reaching FRA, the minimum age to do so is 62. However, retirees who apply early will have their monthly benefits permanently reduced by up to 30%, depending on how early they apply.
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The full Social Security retirement age will increase to 66 years and 10 months in 2025. (Kevin Deitch/Getty Images)
Americans can also delay claiming Social Security benefits and get a bonus for doing so, as the program offers up to an 8 percent bonus until the age they qualify for maximum benefits.
The FRA increase coming in 2025 is the last age change under Social Security Reforms A law passed in 1983, although it may change with future amendments.
The final change applies to workers born in 1960 or later and requires those workers to wait until age 67 to reach the FRA, meaning that a worker born in 1960 would have to wait until the to his birthday month in 2027. to enjoy their full benefits.
Social security crisis: Beneficiaries face 21% cut in benefits without reforms, CRFB says
Social Security's financial resources are strained by America's aging population. (iStock)
social security Recipients are also on track to receive a 2.5 percent cost-of-living adjustment (COLA) on their benefits next year to account for inflation. COLA increases benefits to account for rising commodity prices in the economy so that retirees do not see their purchasing power decline over time.
The 2.5 percent COLA is the lowest since 2021 and comes as inflation in the U.S. economy has eased over the past two years after reaching a four-decade high in 2022, although prices remain high and strain household budgets. They put pressure.
The new COLA will apply to most Social Security recipients when they receive their January benefit distribution.
Social Security's cost-of-living adjustment will be 2.5 percent in 2025, down from the previous year
Social Security beneficiaries are set to receive a 2.5% COLA for 2025. (William Thomas Kane/Getty Images)
Social Security benefits are mainly funded through funding Salary tax receipts, although it relies in part on a trust fund to pay benefits not covered by tax receipts.
A decline in the ratio of workers to retirees caused by the aging of the US population and the retirement of members of the baby boomer generation has strained the finances of the program, which is headed for bankruptcy.
Social Security's primary trust fund, the Old Age and Survivors Insurance Trust Fund, is projected to be depleted in 2033, increasing the total by 21 percent. Profit cutAccording to the nonpartisan Committee on a Responsible Federal Budget (CRFB).
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That equates to a $16,500 reduction in nominal benefits for a typical dual-earner couple retired when the trust fund is depleted, or a $12,400 reduction for a typical single-earner couple, according to the CRFB.
*This article was published on 12/24/18.