If you have paid into the Social Security payroll tax during your working career, you will become eligible to claim your retirement benefits once you reach 62 years of age. The Social Security program does, however, have a Full Retirement Age and as a result, claiming at age 62 is considered as claiming early and your benefits will consequently be subject to a reduction of up to 30%.
In 2026, the Full Retirement Age is slated to increase one final time to 67 years if age for those born in 1960 and later, as per the 1983 Amendments. Now, however, it appears that the White House is seriously considering increasing the Full Retirement Age further amidst a looming funding crisis. According to the annual report from the Social Security Board of Trustees, the combined trust funds of the program are projected to become insolvent in less than a decade from now. Here is what you need to know.
Understanding the Full Retirement Age
The Full Retirement Age (FRA) is the age at which an individual who had payed into the Social Security payroll tax becomes eligible to claim their full benefits. When the Social Security program was initially introduced almost close to a century ago, the FRA was 65 years of age, however, in order to better maintain the program’s financial health in the face of growing life expectancy, the program was amended in 1983. As per the amendment, the FRA would gradually increase in two month increments annually until in reach 67.
In 2025, the FRA increased to 66 years and 10 months for those born in 1959, and in 2026, the FRA will finally have reached 67 years of age of those born in 1960 and later. Following this, there would not be any more increases to the FRA, however, due to the projected shortfall in the program’s funding, the White House is now said to be considering increasing the FRA further.
When asked if raising the retirement age was on the table during an interview with Fox News last Thursday, Social Security Administration (SSA) Commissioner Frank Bisignano said, “I think everything’s being considered, will be considered.”
“Remember, most people told you and I Social Security wasn’t going to be around,” Bisignano added. “And so the generations that are coming in will probably have a different set of rules than we had.”
Projected shortfall
Estimates from Social Security trustees have confirmed that the long-term finances of the program are in trouble. It is worth noting that the program can never become completely insolvent since there will always be someone paying into the dedicated payroll tax. However, in recent years, the number of retirees claiming Social Security appears to be growing disproportionately faster than the number of younger citizens entering the workforce and paying into the Social Security payroll tax.
According to SSA data, “the number of workers to retirees has dropped over time from 16.5 workers per retiree in 1950, to 3.3 in 1985, and 2.8 in 2013.”
As a result, the program has had to place a heavier than usual reliance on funding from the Old Age and Survivors Insurance (OASI) trust fund to pay out benefits. Subsequently, the OASI trust fund is now projected to become insolvent by 2033, which would then trigger an automatic 23% cut to benefits. If the OASI and DI trust funds are combined, the insolvency date moves to 2034 and a 19% cut will be triggered. According to estimates from the Committee for a Responsible Federal Budget (CBPP), “insolvency would leave Social Security beneficiaries with an estimated 24% benefit cut.”
“It needs, really, to be the trustees, which are the four of us — myself, the Treasury secretary, the labor secretary, the HHS secretary — the White House, which is completely committed to protect and preserve Social Security, and then Congress. And that’s where the real work will happen. And that’ll take a while, but we have plenty of time,” Bisignano also noted during the Fox News interview.