How Raising the Full Retirement Age Affects Social Security Benefits

If you've been planning to retire at your full retirement age (FRA) of 67, you may want to keep an eye on what's going on in the Capitol. A small group of legislators has proposed raising the FRA to age 70 and beyond. FRA is the age at which new retirees can receive their full Social Security benefits, whereas claiming benefits before FRA means receiving permanently reduced monthly benefits.

The Republican Study Commission is pushing a plan that would raise the FRA to 69, and Sen. Rand Paul (R-Ky.) wants to see the age increased to 70.

Here's how raising the age from 67 to 70 could impact retirees.

Not the first time

For most of Social Security's history, the FRA was 65. That changed in 1983 when the age was gradually raised to 67. That overhaul effectively cut benefits by 13%. Now, as politicians debate raising the retirement age again, nonpartisan think tanks have delved into how such a change would change the retirement landscape for those who have not yet retired or filed for Social Security benefits.

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Making it harder for early retirees

Currently, a person who claims Social Security benefits at 62 receives 70% of what they would have received at FRA. Waiting until FRA meaning receiving 100% of benefits. And those who wish to maximize their benefits by filing for Social Security at 70 can receive up to 124% of the amount they were due at FRA.

Raising the FRA means those who claim benefits early will see a deeper reduction in benefits, while those who delay claiming will enjoy a smaller increase.

Potential impact

Here are some other ways raising the FRA could affect everyday Americans:

• Lower benefits across the board: No matter when a person retires, raising the FRA reduces the number of years benefits are paid out. Cutting the number of years a person collects Social Security benefits lowers the amount of money they receive throughout retirement. Let's say a person planned to retire at 67 with full retirement benefits of $2,000 per month. Waiting until age 70 for full retirement benefits means receiving at least $72,000 less over the course of their lifetime due to missing out on three years of payments ($2,000 x 36 months = $72,000).
• Potential financial strain: Workers who can no longer work due to health issues or job loss may face unexpected financial challenges if they must wait longer to reach the FRA.
• Disproportionate impact: Lower-income workers, many of whom have physically demanding jobs, could struggle with lower Social Security payments if they're forced to retire before they have access to full benefits. Plus, these workers may not have the resources to invest much for retirement, meaning they depend more heavily on Social Security. Raising the FRA and lessening their lifetime benefits is likely to hit them harder. This is particularly true if they're forced to leave the workforce earlier than planned.

It wouldn't be right away

At the end of 2024, the Congressional Budget Office (CBO) suggested raising the retirement age to shore up the Social Security trust fund. At the time, the suggestion was to allow the age increase to take effect in January 2026. We know, of course, that it didn't take effect.

However, this is how CBO said raising the FRA would work: The FRA would increase by two months per birth year for those born between 1964 and 1981. For example, a person born in 1964 would have an FRA of 67 years and two months. A person born in 1965 would have an FRA of 67 and four months, and so on.

By the time those born in 1981 or later planned to retire, the FRA would be 70. Workers could still choose to claim Social Security benefits at age 62. However, the reduction in scheduled monthly benefits would be larger than under the current law.

It's yet to be seen what steps, if any, Congress will take to solidify the Social Security trust fund. All we know at this point is that raising the FRA is on the table.

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