In 2025, Social Security recipients in the United States will face significant changes to their benefits and eligibility conditions, including a change in retirement age.
One of the primary adjustments will be the cost-of-living increase (COLA), which is intended to preserve purchasing power in the face of inflation.
It will have a direct impact on the credits that contributors accumulate. The 2.5% increase will be applied to payments during the coverage period.
Although statistics show that the average American retires at age 62, the majority of people associate retirement with the age of 65. You can begin receiving Social Security at that age, but if you wait longer, you can increase the amount of your monthly benefit check.
Waiting until your “full retirement age,” which was previously 65 but has since been steadily raised to 67 for those born in 1960 or later, will allow you to receive the full amount of Social Security benefits.
The retirement age will change and now you have to work until this age to collect your pension
Individuals who reach the age of 62 will be eligible to begin the retirement process, though their benefits will be reduced. Individuals who delay retirement, on the other hand, will reap greater benefits.
The rules that will take effect in 2024 will keep the full retirement age (FRA) of 66 years and eight months for those born in 1958 and early 1959.
Only those who reached retirement age in 1959 or earlier will be able to withdraw their funds penalty-free in 2025. However, those born in 1960 will be eligible for full retirement at the age of 67.
One critical point for people who start receiving their pension while working is that their benefits will not be reduced by their additional income. It is important to note that applicants can file their applications with the Social Security Administration (SSA) up to four months before the deadline.

If you plan to apply early, you should visit the SSA’s official website to learn more about the issues that may affect the first payments. If your spouse has died, you may be eligible for survivor benefits beginning at age 60, or age 50 if you are disabled.
When you reach the age of 65, you will become eligible for Medicare, which covers both hospitalization (Part A) and doctor visits (Part B).
How is the early retirement penalty calculated?
To determine how monthly payments are permanently reduced, the Social Security Administration (SSA) employs a formula that takes into account the number of years of contributions and the amount of time remaining until full retirement age.
Every month of expectation during the first 36 months reduces the monthly benefit by approximately 0.55%. Following this, the monthly decrease is only 0.42%. For example, if a 1960-born individual decides to retire at age 62, they will have stopped contributing for 60 months, resulting in a permanent 30% reduction in their pension.
Which states will charge no Social Security taxes for retirees in 2025?
As reported by Econews, some states have implemented tax policies that exempt certain retirement-related income. These states include the following:
- In Illinois, income from retirement plans such as 401(k), pensions, and Social Security payments is free from state taxes.
- Iowa: people over the age of 55 do not pay taxes on withdrawals from 401(k), IRA, or Social Security payments.
- Mississippi: Income from retirement plans and Social Security is exempt from taxation if the retirement plan standards are met.
- Pennsylvania: Wages earned via employment are taxable, while income from IRAs, 401(k), and Social Security payments is not.
Leave a Reply