When claiming Social Security once you retire, taking your age into account is far more important than one would assume. This is because the age at which you begin claiming your retirement benefits can significantly impact the amount you receive in your monthly benefit checks. This is because of the policy of a Full Retirement Age which is in place at the Social Security Administration (SSA). Social Security can be claimed from age 62, however, this is considered as claiming early and as a result, you will be locked in to a reduced benefit amount.
The latest annual report from Social Security trustees revealed that the projected shortfall to the program’s funding is indeed accelerating and requires Congressional intervention. As such, many began wondering if raising the retirement age yet again will be on the table, however, SSA Commissioner Frank Bisignano recently shared a post on X clarifying that this is not the case. Here is everything you need to know.
Social Security retirement age
When the Social Security program was first introduced almost a century ago, the Full Retirement Age, which is the age at which you become eligible to receive your full benefits, was 65. However, due to financing issues and growing life expectancy, the program was amended in 1983 and it was decided that the Full Retirement Age will be gradually increased in two month increments until in reaches 67. In 2025, the Full Retirement Age increased to 66 years and 10 months for those born in 1959, and in 2026, it will increase further to 67 years for those born in 1960 and later. Following this increase in 2026, the Full Retirement Age is not meant to increase further.
Raising the retirement age?
Now, however, due to the projected shortfall, questions are being raised regarding the retirement age and if it will be increased again in order to help curb the projected insolvency of a major trust fund. According to the trustees’ report, if the projected insolvency comes to pass, beneficiaries will be hit with benefit cuts of up to 23%. Following an ambiguous response when asked if raising the retirement age was on the table during an interview with FOX Business, SSA Commissioner Frank Bisignano later shared a post on X clarifying that the retirement age is not currently under consideration.
The post read as follows: “Let me be clear: President Trump and I will always protect, and never cut, Social Security… Raising the retirement age is not under consideration.”
That being said, the Republican Study Committee, “proposed making “modest adjustments” to the FRA for future retirees in its 2024 budget, framing the change as a reflection of longer life expectancy.” The unfortunate news for beneficiaries, aside from having to wait longer to become eligible for their full benefits, is that a higher retirement age will result in cuts to lifetime benefits.
According to the Congressional Budget Office, “raising the retirement age from 67 to 69 would cut lifetime benefits by up to 13 percent for those born after 1971.”
Additionally, as per estimates from the Committee for a Responsible Federal Budget, raising the retirement age further “would only cover about 35 percent of the funding shortfall—leaving policymakers to pursue additional steps.”
Other proposed changes with the aim of preventing the projected shortfall include a bipartisan investment plan, and the introduction of the Fair Share Act. Senator Bill Cassidy and Senator Tim Kaine have put forward a proposal to create an investment fund spread across a broad portfolio. This investment fund would, however, require a $1.5 trillion start-up fund from the Treasury, which would then be invested over a 75 year period.
The Fair Share Act has been introduced by Democrats Sheldon Whitehouse and Brendan Boyle and is aimed at removing the wage cap for individuals earning above a $400,000 threshold. The wage cap for paying into Social Security payroll taxes is currently standing at $176,100, and as a result, higher earners pay proportionally less into the payroll tax, relative to their total earnings.