As people consider retirement they must decide when to claim their Social Security benefits. Social Security determines their basic benefit amount based on the benefit formula. From there, the exact amount workers receive depends in part on when they claim it: the earlier they claim, the smaller the benefit.
People can begin claiming as early as age 62. The size of the benefit increases with each month of delay beyond that, with the maximum available at age 70. Social Security also refers to the full retirement age (FRA) which used to be age 65, is currently age 66, and will increase to age 67 for people born in 1960 or later. Under current law, waiting until age 70 to claim retirement benefits will result in a benefit check that is about 76% higher than what the same person would have received at age 62.
Over the past several decades, people on average are living longer and spending more time in retirement than those in prior generations. At the time of Social Security’s creation, people who reached age 65 lived an average of 12 additional years. Men reaching age 65 today on average live an additional 19 years, while women who reach 65 live an average of 22 additional years. As a result, Social Security is paying benefits to each person longer than it used to on average, contributing to the financial strain on the system.
Some people have called for adjusting the age at which people can begin to claim benefits, known as the early eligibility age (EEA), or the FRA to reflect this increasing longevity. Doing so could involve simply increasing the age. Another approach would be to use a formula that increases the FRA continually as longevity increases.
Those opposed to increasing the early and full retirement ages have several concerns. First, they point out that it would effectively serve as a benefit cut because those who could not wait to claim will see a smaller benefit than they would have previously received. Although this affects all non-disability recipients, those affected the most are workers unable to delay claiming benefits due to their health, physical challenges of their job, or inability to find work. Increasing the FRA could also negatively affect the benefits available to surviving spouses. The size of the survivor benefit depends on the deceased spouse’s worker benefit. If the spouse accepted a lower benefit in exchange for retiring before the FRA, the survivor benefit would also be lower than if the spouse had waited.
Another difficulty associated with increasing the EEA or FRA involves job availability and employment discrimination. Implementing such a policy change assumes that people will be able to work longer if they are so inclined. Ongoing age discrimination in employment means that not everyone who would like to work longer will be able to do so.
FULL/NORMAL RETIREMENT AGE AND EARLY RETIREMENT ELIGIBILITY: Policy
Changes to full retirement age
Any further increases in the full retirement age should be conditioned on adequate protections for those who may have difficulty postponing retirement. This group includes workers with lower incomes who also often have below-average life expectancies, workers who are in ill health, workers in jobs with strenuous or difficult working conditions, workers with caregiving responsibilities, and older workers facing age discrimination and long-term unemployment.
The age of eligibility for early retirement benefits should be raised only if provisions are made to ensure that people who cannot work past age 62 are protected.