Retirees Aged 66-67: For retirees, Social Security is an essential source of income, but deciding when to claim can be confusing, especially for those between the ages of 66 and 67. At this age, you are at full retirement age (FRA) for Social Security, and it’s an important decision to make. Should you claim your Social Security benefits now before the 2025 Cost of Living Adjustment (COLA) increase? Or should you wait longer to maximize your benefits, especially given the potential for a higher COLA?
In this article, we will break down the pros and cons of claiming your Social Security benefits at 66-67, the possible impact of the 2025 COLA increase, and share strategies to maximize your Social Security payments.
Retirees Aged 66-67
| Key Information | Details |
|---|---|
| Full Retirement Age (FRA) | 66-67 years old (depending on birth year). |
| Maximum Social Security Benefit | $3,822 per month in 2024 (for those claiming at age 70). |
| 2025 COLA Estimate | Potentially larger than previous years, based on inflation trends. |
| 2024 Average Monthly Benefit | $1,800 for retirees at FRA. |
| Timing of Claiming | Claiming before COLA could maximize benefits in the short term. |
| Official Social Security Website | www.ssa.gov |
For retirees aged 66-67, the decision of when to claim Social Security benefits is a critical one. With the 2025 COLA increase on the horizon, you may be wondering whether it makes sense to claim early or delay your benefits. The best choice depends on your financial situation, health, and retirement goals.
If you need income now, claiming at full retirement age ensures you get the maximum benefit available at your age. If you can wait, delaying your claim until age 70 may allow you to increase your monthly benefit significantly.
What Is the 2025 COLA Increase?
The Cost of Living Adjustment (COLA) is an annual increase in Social Security payments designed to keep up with inflation. Every year, the Social Security Administration (SSA) determines how much the COLA will be based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This ensures that Social Security recipients’ benefits do not lose purchasing power due to inflation.
In 2024, the COLA increase is estimated to be 3.2%, but analysts predict that the 2025 COLA could be even larger, due to continued inflationary pressures on the economy. For retirees, this could be a golden opportunity to lock in a higher benefit—but timing matters.
Full Retirement Age (FRA) and Social Security Benefits
Before diving into the specifics of the 2025 COLA, let’s review how Social Security benefits work when you reach your Full Retirement Age (FRA), which is 66 or 67, depending on your birth year.
- Claiming at FRA: When you reach FRA, you are eligible to receive your full Social Security benefit—this is the amount that has been calculated based on your highest-earning 35 years of work history. For most people, FRA is between 66 and 67 years old.
- Claiming Early (at 62): If you claim Social Security benefits at age 62, your monthly payment will be reduced by as much as 30%. This reduction is permanent, so you’ll receive smaller monthly payments for the rest of your life.
- Delaying After FRA: If you delay claiming beyond your FRA, your benefit will grow by about 8% per year until you reach age 70. This means that waiting until age 70 could significantly increase your monthly payment. Someone who waits until 70 can receive up to 132% of their FRA benefit.
How the 2025 COLA Could Affect Your Social Security Payments
The 2025 COLA increase is expected to be substantial. If you are already receiving Social Security benefits, this increase will be applied to your monthly check starting in January 2025. The exact amount of the COLA is determined by inflation trends, but experts speculate it could be higher than typical years due to persistent inflation.
If you are claiming Social Security before January 2025, the COLA increase will still apply to your payments starting in January. The question is: should you claim now to take advantage of the COLA bump, or should you wait and let your benefit grow for several more years?
Example of COLA Impact:
- Let’s say your monthly benefit at FRA is $2,500. If you claim in December 2024, you will receive your full benefit for that month. However, in January 2025, the SSA will apply the COLA increase. For example, if the COLA is 8%, your monthly benefit will increase to $2,700 starting in January 2025.
- If you wait until January 2025 to claim, your initial benefit would already include the COLA increase, meaning you could start with $2,700.
When Should You Claim? Timing Is Everything
The decision of when to claim Social Security depends on your financial needs, health, and long-term goals. Below, we break down the options for retirees aged 66-67 and how the 2025 COLA increase fits into your strategy.
1. Claiming Before 2025
If you claim before January 2025, you will lock in a higher initial benefit and then receive the COLA increase in January. This could be a good strategy if you need income now and want to take advantage of the COLA adjustment for the upcoming year. However, if you claim now, you won’t benefit from the 8% annual increase that you could receive by delaying until age 70.
2. Delaying Beyond FRA to Maximize Your Benefit
If you can afford to wait, delaying your Social Security claim beyond FRA could increase your monthly benefit by 8% per year up until age 70. If you’re in good health and expect to live for many more years, this could be a strategy that increases your lifetime Social Security payments.
For example, delaying until age 70 could increase your benefits to $3,822 per month, significantly more than the $2,500 you would receive at FRA.
2025 COLA and Maximizing Your Social Security Benefits
In light of the 2025 COLA, here’s how you can maximize your Social Security benefit, depending on your situation.
- If you claim at FRA (66-67): You’ll receive the full benefit for your age, plus any COLA adjustments that come with inflation. If you need income now, claiming at FRA makes sense, especially with the upcoming COLA increase.
- If you can delay past FRA: If you can afford to wait until age 70, you’ll receive the largest monthly payment, and the COLA increase will be applied to this higher amount. This could be a better option if you expect to live for several decades and are in good health.
- Understanding How COLA Affects Your Monthly Payments: COLA increases don’t just affect your initial benefit—they affect every payment you receive after you start claiming. Therefore, even if you claim now and get a COLA increase in January, the larger monthly benefit could significantly improve your financial situation for the rest of your retirement.
How Other Factors Impact Social Security
While the COLA increase is a big consideration, it’s important to also factor in other considerations when deciding when to claim your Social Security benefits. Here are some additional factors to think about:
1. Longevity and Health:
If you’re in good health and have a family history of longevity, delaying Social Security benefits until age 70 might make the most sense. Your lifetime benefits could be much higher if you wait to claim.
2. Other Sources of Retirement Income:
If you have other sources of retirement income, such as pensions, savings, or investments, you might be able to afford to delay your Social Security claim. This could allow you to maximize your Social Security benefit while drawing from other resources in the meantime.
3. Tax Considerations:
Social Security benefits are taxable, and the more you earn in other sources of income, the more you might owe in taxes on your Social Security benefits. In some cases, delaying your Social Security benefits could reduce the tax impact in the future, as your payments will be larger and taxed at a potentially lower rate if you reduce other income.
Frequently Asked Questions (FAQs) about Retirees Aged 66-67
Q1: What is the maximum Social Security benefit I can receive?
A1: If you claim Social Security at age 70, the maximum benefit in 2024 is $3,822 per month. This can increase with future COLA adjustments.
Q2: If I claim Social Security before 2025, will I still get the COLA increase?
A2: Yes, if you claim benefits before January 2025, you will still receive the COLA increase for that year. The increase will be added to your monthly payment starting in January 2025.
Q3: How do I know if I should claim early or delay?
A3: If you need income now, claiming at 66 or 67 (your full retirement age) is a good choice. If you can afford to delay and want to maximize your benefits, waiting until age 70 could provide a larger monthly payment.
Q4: What happens if I claim after full retirement age?
A4: If you claim after FRA (up until age 70), your benefits will increase by 8% per year. This means you could receive significantly more than the monthly benefit available at FRA.
