The Social Security Administration (SSA) is proposing a radical change in what we call the age of retirement. This paradigm change has the potential to redefine how Americans view and access their benefits. It’s amazing to see a bipartisan effort go this far! Most recently, the House Ways and Means Committee moved the Claiming Age Clarity Act forward with a strong 41 to 1 vote. This bill aims to clarify the language surrounding key ages tied to Social Security benefits, particularly the terms “full retirement age” and “early eligibility age.”
The SSA uses “full retirement age” to mean the age at which you can collect the full amount of your promised benefits. It’s sometimes called the “normal retirement age.” Cost-of-living adjustments aren’t enough to bring retirees’ benefits up to date. If you were born after 1959, you will receive full benefits when you turn 67 years old. Specifically, Age 62 is the early eligibility age for claiming benefits. This allows beneficiaries to begin receiving payments sooner, but their monthly payment amounts will be permanently lower.
In arguing against this proposed change, Rep. John Larson highlighted not just the unfairness of raising the retirement age, but the fiscal impact. “For every year you raise the age, that is a 7 percent cut in benefits,” he stated. This should alarm everyone, if for no other reason. If we raise the retirement age, we will do the most damage to people who need to retire and can’t wait to receive full retirement benefits, thus further lowering their monthly payments.
The bill as proposed raises the base benefit age from 66 to 67. If people delay until 70 to take their benefits, they will live to the maximum benefit age. This important change would go a long way to improving beneficiaries’ understanding of their options and the financial consequences of their claiming choices.
The Congressional Budget Office has officially scored the proposed changes. They determined that increasing the full retirement age to 70 will not come close to solving Social Security’s anticipated 75-year shortfall. This puzzling finding raises important questions regarding the long-term sustainability of the program. Can it really deliver for those who will retire in the years to come?
SSA Commissioner Frank Bisignano, commenting on these conversations still being active. When asked if raising the retirement age was on the table, he said, “Everything’s on the table.” He noted, “Raising the retirement age is not under consideration,” suggesting that while terminology may change, fundamental shifts in eligibility rules are not imminent.
Emerson Sprick, a policy researcher with Social Security Works, noted that better definitions start with different words. He noted, “It says nothing about what that benefit is going to look like,” emphasizing that understanding the financial implications of these changes remains crucial for individuals planning their retirements.
Sprick proposed that this alternative wording would lead to better comprehension of folks’ benefits. Regardless, just having the awareness can better inform how they get after those benefits. “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,” he remarked.
The discussion around these proposed changes raised some interesting comparisons to international practices. Denmark’s recent decision to raise its retirement age to 70 has sparked discussions about similar adjustments in the United States as policymakers grapple with Social Security’s financial challenges.
As these discussions continue, both lawmakers and experts stress the importance of ensuring that any legislative changes take into account the realities faced by future retirees. By increasing clarity, the Claiming Age Clarity Act helps people understand their choices and make more informed decisions. More importantly, it starts discussions of the serious long-term changes necessary to keep Social Security going strong for future generations.