Financial experts predict that retiring and collecting Social Security benefits in 2025 may be more advantageous than in 2026 based on current economic factors, such as interest rates and the Social Security Administration's cost of living adjustment.
That's because interest rates are high and market swings haven’t calmed down, according to MDRN Capital founder and CEO Aaron Cirksena.
"These factors can shrink your retirement income if you’re not positioned carefully," Cirksena told NTD. "Waiting gives you another year to save and could bump your Social Security payout due to cost-of-living adjustments but you're gambling on future tax laws, market conditions, and rising Medicare costs."
Retiring in 2025 means locking in today’s known indicators, such as the Federal Reserve Bank's current interest rate hovering between 4.25 and 4.5 percent.
"Retiring in 2026 and collecting Social Security benefits is not risky for the majority of retirees if their decision is based on the Fed lowering interest rates," certified financial planner and Augustus Wealth founder Derek Russell Munchow told NTD.
As for the advantages to retiring in 2026, other than having another 12 months to save money, higher interest rates are likely to keep savings accounts and CDs yielding better returns in 2026, according to Falcon Wealth Advisors founder Jake Falcon.
"This can help offset inflation and supplement Social Security income," he told NTD.
Before deciding whether to retire and collect Social Security benefits in 2025 or 2026, Cirksena suggests creating a detailed income plan.
"Know your fixed income sources and compare them to big expenses," he said. "If the math doesn’t work, you should consider delaying, downsizing, or working part-time."
The Senior Citizens League estimates that Social Security's 2026 cost-of-living adjustment (COLA) will only be 2.5 percent next year.
“Social Security adjustments are reactive, not proactive, and they are based on past prices so while retirees may feel some short-term relief in 2026, it doesn't preserve purchasing power over time,” Munchow said. “If inflation runs hotter than expected, they fall behind. If it cools, they gain little ground.”
Munchow is also worried about Tax Cuts and Jobs Act (TCJA) provisions expiring by Jan. 1, 2026.
The TCJA has generally reduced taxable income for everyone. For example, single retirees aged 65 and older receive a standard deduction of $2,000, and couples who are married receive a $3,200 standard deduction. However, the increased standard deduction under the TCJA sunsets on Dec. 31, 2025.
“That means tax rates could rise starting in 2026 unless Congress takes action,” Munchow added. “If you retire in 2026, you could miss out on the opportunity to do Roth conversions that lock in today's lower tax rates. Retiring in 2025 gives you the opportunity to lock in today's lower tax rates before they potentially rise in 2026."