For 2025, payments will receive a 2.5% boost to ensure benefits keep pace with rising expenses. This adjustment directly impacts the credits workers have earned over their careers.
Retirement Age Changes:
– Those born in 1958 or earlier will retain full retirement age (66 years and 8 months).
– Individuals born in 1960 will reach full retirement age at 67.
– Retirees who continue working can earn extra income without it affecting their benefits.
Early Retirement Considerations:
– The Social Security Administration allows benefits to be applied up to four months early, but this may impact initial payments. Plan ahead to avoid surprises.
– Survivor benefits are available starting at age 60 or as early as 50 for individuals with a disability.
– Medicare becomes eligible at age 65, covering hospitalization and doctor visits.
Cashing Out Early:
– The SSA calculates monthly benefit reductions based on years contributed and distance from full retirement age.
– For the first 36 months, benefits shrink by 0.55% per month, then 0.42%.
Tax-Friendly States for Retirees:
– Illinois: Exempting retirement income from state taxes, including Social Security benefits and 401(k) withdrawals.
– Iowa: Residents 55 and older don’t pay state taxes on 401(k) and IRA withdrawals or Social Security benefits.
– Mississippi: Retirement income, including pension payments and Social Security, is tax-free with proper plan requirements met.
– Pennsylvania: Income from 401(k)s, IRAs, and Social Security is tax-exempt.
Source: https://eladelantado.com/news/new-retirement-age-january-2025