By Alessandra Malito
Changes to the full retirement age would have to be quick and steep to make a dent in the program’s shortfall
Raising the full retirement age might be one provision in a package of proposals to fix Social Security’s financing issues, but it would impact how people plan for retirement.
Young Americans are already skeptical that they’ll actually receive full benefits from Social Security when it comes time for them to retire, even after decades of paying into the system. One widely touted proposal to shore up the program’s finances could make that fear a reality – or at least change how and when they can claim their benefits.
Experts and lawmakers across the political spectrum say raising the full retirement age – the age when a person can claim their full Social Security benefits – may be one of the provisions in a package of changes to fix Social Security’s current money problems. The program’s trust funds are expected to run out of money by 2032, at which point beneficiaries would receive about a 20% cut to benefits.
Congress has yet to seriously discuss solutions to the program’s financing issues, but as Social Security lurches toward insolvency in the coming years, legislators may be forced to start deliberations soon. Increasing the full retirement age, an idea that has come up in arenas as high-profile as the 2024 presidential election, could be one part of the solution.
If the proposal comes to fruition, it would put young adult workers in a “really unfair position,” said Alex Lundrigan, the policy and advocacy manager at Young Invincibles, a nonprofit advocacy group for people ages 18 to 34. “We talk about life expectancy increasing and people theoretically are expected to live longer, like my generation and generations under me, but that doesn’t mean we should work longer.”
The full retirement age
Social Security’s full retirement age dictates when beneficiaries get 100% of what they’re owed in benefits, but the current rule has become outdated now that many Americans are living longer, experts said.
There are a few key ages for Social Security claiming: age 67, which is the full retirement age for anyone born in and after 1960; age 70, which is the age when claimants can get the maximum benefit (their full benefit plus any benefit credits they accrued for delaying their claiming); and age 62, which is the earliest workers can receive their retirement benefits.
Congress increased the full retirement age from 65 to 67 as part of the 1983 amendments to the program, with the increase gradually phased in over decades. The law was passed in 1983, but the changes to the retirement age didn’t take effect until 2000 and played out over a span of more than 20 years.
Phasing the increase in the full retirement age over such a long period made the change less of a political liability, because those who were affected were still decades away from retiring. “They had 40 years to adjust to this idea,” said Andrew Biggs, a senior fellow at the American Enterprise Institute, a right-leaning think tank. “If you give people plenty of warning, they can accept a higher retirement age.”
“The problem we face” today, he added, is that “we delayed this stuff for so long, we don’t have that option.” For the increase in age to make any sort of meaningful improvement to Social Security’s funding issues, the adjustment would have to happen over a much shorter time period, he said. “When people get upset at Congress for refusing to act on Social Security, this is the cost of it,” Biggs said.
An abrupt increase to the full retirement age would affect people who may be only a few years away from retiring. That could derail retirement plans, especially for those who have used their full estimated benefits to determine how much money they can rely on every month in retirement alongside any withdrawals from their retirement savings.
‘When people get upset at Congress for refusing to act on Social Security, this is the cost of it.’Andrew Biggs, senior fellow at the American Enterprise Institute
How an age change could help the system
Social Security will need a package of provisions to fix the funding shortfall. A single proposal can’t bring it out of its deficit for the long term, experts said.
Still, increasing the full retirement age is an option, and one that has reached the level of presidential politics. During the 2024 Republican primary campaign for president, former South Carolina Gov. Nikki Haley mentioned the idea, saying it should only affect younger workers. Former New Jersey Gov. Chris Christie also suggested raising the full retirement age to 69 or 70. The Republican Study Committee, made up of House Republicans, also floated the concept of raising the age from 67 to 69.
How much the change helps Social Security’s finances depends on how quickly lawmakers implement it, as well as how long each phase of the implementation takes. “You can vary the impact on the program’s finances by speeding up or slowing down the phasing schedule,” said Andrew Eschtruth, the director of the Center for Retirement Research at Boston College.
Increasing the age from 67 to 68 would close the deficit by 12%, while moving it up to 69 would take care of 17% of the deficit, Eschtruth said. Moving the full retirement age to 70 would close the gap by 22%, he said. This is assuming policymakers implement the changes immediately, which would disrupt the plans of people nearing retirement.
The Social Security Administration’s actuaries analyze the trust fund’s solvency over a 75-year period. When policymakers implemented the 1983 amendments to the program, the actuaries knew the changes would help keep the program solvent, “but they knew eventually it would need changes,” said Monique Morrissey, an economist at the Economic Policy Institute, a left-leaning think tank.
The changes carried the program over about a 50-year period, she noted, and demographic shifts – including the declining birthrate, curtailed immigration and increased wage growth among those with earnings above the income-tax cap – have exacerbated the program’s financing issues.
Still, Americans who were young at the time the law passed had the chance to adjust their expectations and retirement plans gradually to the updated full retirement age. If the age were to rise again, today’s young Americans may not have that much time. The changes would also come as young adults are struggling with the cost of living, including less affordable homes, expensive childcare and the need for many households to have two incomes. And while many members of Generation Z, who were born between 1997 and 2012, started saving for their futures at young ages, other young adults say retirement savings can’t always be a priority when present-day expenses eat up so much of their incomes.
The change would fall disproportionately on poor and young Americans
If lawmakers raise the full retirement age, it will have a major impact on low-income workers and workers who were unable to save for their retirement, particularly if the early eligibility age remains at 62. In that scenario, people who claim early would see bigger cuts to their benefits.
Waiting until full retirement age to claim Social Security might seem like an easy decision – benefits are cut by about 30% if people claim at the earliest possible age of 62 – but not everyone has the option to delay. The reduction is permanent and depends on how many months before their full retirement age the person claims benefits. The closer they are to their full retirement age, the less of a cut they receive in monthly benefits.
Raising the full retirement age, even by one year, but keeping the early eligibility age at 62 would increase the number of months between age 62 and when a person would receive 100% of their benefit, thus reducing monthly benefits even more, experts said.
“It is a benefit cut,” Eschtruth said.
An alternative is to also raise the minimum claiming age, a proposal that had been put forward long ago but is not very popular. Changing the early eligibility age would not necessarily help the program’s shortfall – individuals might actually get a higher monthly benefit if the time between their early claiming age and full retirement age was reduced – but it would mean people could no longer plan to start their benefits at age 62, experts said.
The first law allowing an early claiming age was passed in 1956 and let women workers and wives of workers claim retirement benefits at a reduced rate beginning at age 62. In 1961, President John F. Kennedy gave men this option as well. When Social Security was created in 1935, the retirement age was 65.
Age 62 is now the most popular claiming age, said Charles Blahous, a senior research strategist at the Mercatus Center, a libertarian think tank at George Mason University, but having that option has actually hurt many retirees, especially now that the full retirement age is five years later than the earliest claiming age. “That can be a dangerous combination,” he said. Lower-income workers, who may have physically demanding jobs they can’t continue to do will into their 60s, and women, who have longer life expectancies than men, are locked into lower benefits “for life,” he added.
When legislators mull increasing the full retirement age, they should also seriously consider what to do about the early eligibility age, such as how much of a reduced benefit retirees would receive if they claimed six or seven years before their full retirement age, Blahous said. The 1983 amendments did not address the early eligibility age. “They didn’t change it over time, and they should have,” he said. “Instead of three years apart, it is now five years apart.”
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