What Could Raising the Retirement Age to 70 Mean to You?

Sometime within the next eight or nine years (depending on who you ask), the Old Age and Survivors Insurance (OASI) trust fund is expected to be depleted. If Congress allows the fund to dry up without a backup plan, Social Security benefits for retirees could be cut by 20%.

It's not a given that Congress will allow the fund to go bankrupt, and this crisis is not the first of its kind. In 1983, Congress was compelled to take action to ensure continued payments to the American people.

The trick is to come up with a solution that all parties can agree upon. Here's a sample of proposed ideas:

• Increase the taxable maximum ceiling (currently, wage earners only pay Social Security taxes on the first $176,100 earned).
• Tax all Social Security benefits of high earners.
• Increase the payroll tax.
• Replace the Windfall Elimination Provision with the Government Pension Offset.
• Expand the labor force by changing policies on legal immigration.
• Raise the full retirement age (FRA) to 70.

Image source: Getty Images.

Mixed messages

When asked about potentially raising the FRA in September 2025, Social Security Commissioner Frank Bisignano said, "Everything's being considered." By the next day, he walked back the statement.

For the average American, the message is anything but clear. Already, some policymakers have proposed raising the age that a person can claim Social Security benefits to 70 and beyond. That's not to say it will come to fruition, but if the retirement age is pushed to 70, here's what that could mean for you.

Fewer years to collect

According to the Center on Budget and Policy Priorities (CBPP), the cuts would disproportionately affect lower- and middle-income beneficiaries who rely most heavily on Social Security benefits. Not everyone has a retirement plan to draw from, and not everyone has the financial means to weather a retirement with a lower overall payout of Social Security benefits. And yet those who'd like to push the retirement age back by a few years provide all kinds of reasons for doing so.

One of the primary arguments in favor of a later retirement age is that Americans are living longer. That's not quite true of all Americans. The average life expectancy has increased since Congress last overhauled Social Security in 1983, but this increase has been more pronounced for high earners than for low earners.

The life expectancy gap between high earners and low earners is large and growing. The richest American men live 15 years longer than the poorest, and the wealthiest American women live 10 years longer than the poorest women.

Even if you forget about the most affluent retirees receiving twice as much per month in Social Security benefits as poorer retirees, there's a matter of lifespan. The longer a person lives, the less waiting an extra three years to collect benefits impacts their bottom line.

A reduction in overall benefits

Raising the retirement age would reduce the average lifetime benefits for new retirees by nearly 20% due to the shorter time spent collecting benefits. That's about the same as the Social Security Administration (SSA) says it would have to cut if Congress can't come up with a workable solution over the next few years.

For most of Social Security's history, the retirement age was 65. When it was gradually raised to 67 in 1983, benefits were effectively cut by 13%, as compared to the benefits those same retirees would have received if they'd retired at 65, meaning raising the retirement age is another form of a benefit cut.

Less help for those facing difficult circumstances

There's been a recent surge in the number of Americans filing for Social Security benefits early, with many filing as soon as they turn 62. Not everyone retires because they're ready to relocate to another country. Many are faced with health issues that prohibit them from working or must quit work to care for a family member. If the retirement age is pushed back to 70, collecting benefits as early as 62 may not even be an option.

Some people may be somewhat shielded

According to SSA research, only about 5% of disability beneficiaries and 11% of retired beneficiaries with disabilities would be impacted if the retirement age were increased to 70, due to the way benefits for those groups are structured.

Benefits for surviving spouses may not be hit quite as hard, either. That's because Social Security has a "widow(er)'s limit" provision, ensuring that a surviving spouse never receives less than 82.5% of their deceased loved one's full benefit amount. While they might not retain 100% of the benefits, they could be better off than some others.

It's important to note that nothing is carved in stone, and Congress could turn this ship around.

The Motley Fool has a disclosure policy.