Social Security’s retirement age language may change

Deciding when to claim Social Security retirement benefits is a big decision — and Congress is looking at changing the program’s wording to help people better understand their options.

Understanding the trade-offs for claiming at different ages can be confusing, and some experts say the terms the agency currently uses do not help. Only 21% of more than 1,800 adults recently surveyed by the Nationwide Retirement Institute can correctly identify the age at which they qualify for full Social Security benefits.

Earlier this month, the House Ways and Means Committee advanced the Claiming Age Clarity Act, a bipartisan bill, in a 41 to 1 vote. A version of the bill has also been proposed in the Senate.

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The proposed changes would make the claiming language “substantially clearer,” said Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center.

If you were born after 1959, you will be eligible for the full Social Security retirement benefits you have earned at age 67. That is what the agency calls your “full retirement age” — the point at which you may claim 100% of the benefits you’ve earned.

The full Social Security retirement age has been changing — from age 66 to 67 — based on year of birth.

The shift to a higher full retirement age was enacted in 1983 as part of a legislative package that restored the program’s financing after it faced a funding shortfall. That included raising the age of eligibility for so-called unreduced retirement benefits to 67 by 2027.

Today, Social Security also faces a funding shortfall, and there is a debate among lawmakers and experts as to whether raising the retirement age may again be on the menu of changes.

Currently, Social Security beneficiaries can maximize their benefits by delaying the age at which they start their monthly retirement payments. Beneficiaries first become eligible for benefits starting at age 62, but they take a permanent cut for doing so. By waiting to claim until age 70, they may receive the maximum monthly benefit available to them.

The Claiming Age Clarity Act calls for changing the language the Social Security Administration uses to describe claiming ages:

• Age 62, currently referred to as the “early eligibility age.” would become the “minimum benefit age” to reflect the permanent benefits reduction that claimants see if they start that soon.

• Age 66 to 67, currently called “full retirement age” based on an individual’s birth year, would instead be referred to as “standard benefit age.”

• Age 70, the latest age for benefit increases, would no longer be called “delayed retirement age” and instead be referred to as “maximum benefit age.” For every year an individual delays claiming from full retirement age up to age 70, they may earn an 8% increase in benefits, boosting their benefits by up to 24%.

Calling age 62 the “early eligibility age” conveys you can start benefits then, but “it says nothing about what that benefit is going to look like,” Sprick said.

By instead calling that milestone “minimum monthly benefit age,” that better communicates the implications for the monthly payments those beneficiaries will receive, he said.

“There’s evidence that it would have real effects on claiming behavior, and that will have real effects on folks’ financial security throughout retirement for the rest of their lives after they claim,” Sprick said.

In a Sept. 18 Fox News interview, Social Security Administration Commissioner Frank Bisignano said “everything’s being considered” in response to a question on whether the retirement age may be raised.

However, the next day Bisignano clarified in a follow-up statement on X, “Raising the retirement age is not under consideration.”

The prospect of raising the Social Security retirement age has little support among Americans, according to a January study from the National Academy of Social Insurance, AARP, National Institute on Retirement Security and U.S. Chamber of Commerce.

The reason: Americans are “broadly opposed” to benefit cuts, the research found, and raising the retirement age counts as a benefit reduction.

To be sure, any such change would have to be enacted by Congress. Democrats have largely rejected suggestions to raise the Social Security retirement age. “For every year you raise the age, that is a 7 percent cut in benefits,” Rep. John Larson, D-Conn., said in a Sept. 18 statement.

Yet suggestions of raising the retirement age continue to come up.

In December, Sen. Rand Paul, R-Ky., proposed an amendment to the Social Security Fairness Act that would raise the full retirement age to 70. That proposal did not pass.

A December Congressional Budget Office analysis found moving the full retirement age to 70 would not fully address the program’s 75-year shortfall.

Denmark recently pushed its retirement age to 70.

Yet some experts say it would be a stretch for the U.S. to follow its cue, since U.S. poverty rates are higher, leading life expectancy increases to be spread unevenly.

“There are increasing concerns in recent years about an across-the-board increase to the retirement age, given the disparities in longevity between higher earners and lower earners, folks with higher education levels and lower education levels,” Sprick said.

If the retirement age were increased, claimants who cannot wait past age 62 may see further benefit reductions. Moreover, it may impact the progressivity of the benefit formula, which provides lower-level earners with higher replacement rates.

There are ways Congress could mitigate those effects, such as by creating a new basic minimum benefit to help those who cannot delay benefits, for work, health or other reasons, according to the Bipartisan Policy Center. Lawmakers could also opt to increase the benefit replacement rate for lower earners, according to the Washington, D.C.-based think tank.