The Social Security program, which has been overseen at the federal level by the Social Security Administration (SSA) in the United States for decades, stipulates that retirement benefits are determined by two key factors: work history and full retirement age. By 2025, persons planning to retire at age 67 will face different amounts depending on their birth year, inflation adjustments, and late retirement credits.
The FRA (minimum age to receive 100% of the pension) is 66 years and 8 months for claimants born after 1958. This indicates that retiring at 67 in 2025 will result in a four-month delay and a 2.67% increase in the monthly amount. The figure is based on an additional 0.6667% per month following FRA.
Not everyone receives the same maximum Social Security payment: The various reasons
According to the most recent SSA data, the maximum payout for those who choose to claim their benefits through their FRA is $4,018 per month. However, this figure is only applicable to persons born in 1960 or later. The maximum monthly payment for persons born in 1958 is $3,924, which includes adjustments for delayed retirement.
To collect the maximum Social Security income, you must have a 35-year work history and earnings in the maximum taxed bracket, which is now $168,600 per year. The SSA’s formula combines indexed salaries with a cost-of-living adjustment (COLA). By 2025, this adjustment will be 2.5%, increasing monthly payments from approximately $1,927 to $1,976, according to SSA statistics.
People who delay retiring beyond the full retirement age (FRA) earn late retirement credits, which raise their monthly benefit amount. For example, someone born in January 1958 will achieve their FRA in September 2024. If they choose to retire in January 2025, they will earn $3,924 per month, rather than the $3,822 ceiling for 2024. This difference is due to a 2.67% increase from waiting an extra four months to begin collecting.
Let us look at an example: Social Security increases with each year of waiting
Consider George, an American worker (imaginary only) who is deciding when to begin receiving Social Security benefits. If you elect to retire at the minimum age of 62, you will earn $1,500 each month. However, because he is collecting before his Full Retirement Age (FRA), which is age 67 if he was born in 1960 or later, his pension is decreased.
If George waits a year and retires at age 63, his monthly benefit will rise to around $1,608, a 7.2% increase over the original sum. If you wait until you’re 64, the benefit will increase again, reaching around $1,716 per month. At 65, your payout would be $1,824, and if you retired at 66, you would receive almost $1,932 each month.
When George reaches the age of 67, he will be eligible for the entire amount, which is approximately $2,040 per month. However, if you opt to keep working and postpone retirement, you will continue to accrue deferred retirement credits, which raise your benefit by 8% for each year you wait, up to the age of 70.
Thus, if George retires at age 68, he would receive approximately $2,203 per month; at age 69, he will receive approximately $2,367; and if he waits until age 70, his monthly payout will be $2,530, the highest potential benefit in his situation. This sum is 68% higher than if he had begun collecting at age 62.,,