Social Security Changes Could Raise Full Retirement Age to 70 -- Here’s Why It's Possible
Beginning in 2027, the full retirement age for all Social Security recipients will be 67 years old.
That’s the oldest FRA ever and completes a process that began decades ago, when Congress voted to incrementally increase the full retirement age from 65 to 67.
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Although there are no official plans to further increase the full retirement age to 70, it’s certainly possible.
Full Retirement Age Basics
The full retirement age is when you’re entitled to your full Social Security benefits. You can apply for benefits as early as age 62, but you won’t get all the money you’re due until you reach the FRA.
Even when you do reach full retirement age, you don’t have to apply. The longer you wait after your FRA, the bigger your monthly payment, according to the Social Security Administration (SSA). Once you hit age 70, there’s no more financial advantage to waiting.
For everyone born in 1960 or later, the full retirement age is 67. The only other FRA that is still relevant applies to those born in 1959, who have an FRA of 66 years and 10 months.
Could the FRA Be Raised to 70?
There’s no reason to believe the full retirement age will be raised to age 70 – and no reason to believe it won’t. It’s definitely within the realm of possibility. After all, the FRA has been raised before.
In 1983, Congress increased the full retirement age from 65 to 67. As the Bipartisan Policy Center noted, that change was gradually phased in over the next three-plus decades.
Raising the FRA to age 70 would likely require similar legislation. But the idea has its supporters – partly because seniors are living longer than they used to, and partly because of a looming budget shortfall involving Social Security’s trust funds.
There are two separate trust funds: The Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivors benefits; and the Disability Insurance Trust Fund, which pays disability benefits.
A recent update from the SSA projected that the OASI fund will “become depleted” in the fourth quarter of 2032. When that happens, Social Security’s income from payroll taxes would only be able to fund 78% of the benefits.
Pros and Cons of Raising the FRA
Raising the full retirement age to 70 could help alleviate some of the funding shortfall, according to a 2024 report from the Congressional Budget Office).
One option would be to increase the FRA from age 67 by two months per birth year for workers born between 1964 and 1981. For all workers born in 1981 or later, the FRA would be 70. Such a plan would save money in a couple of ways:
It would “reduce scheduled lifetime benefits for every affected Social Security recipient,” regardless of the age they claimed benefits.
In addition, pushing back the FRA means recipients would “receive benefits for fewer months.”
While raising the FRA is one way to deal with the expected trust fund shortfall, not everyone is on board with it. The idea has been floated for many years now – and has always been met with resistance.
According to a 2023 analysis from the Center on Budget and Policy Priorities (CBPP), raising the FRA would cut benefits “across the board” and “disproportionately harm” seniors with low incomes.
“Social Security benefits are already modest, and beneficiaries rely on them for most of their income,” the CBPP noted. “The facts argue for avoiding cuts in future benefits, which includes not raising the full retirement age…It would be better and more equitable to finance critical Social Security benefits by raising revenues, particularly from higher-income people whose life spans — and incomes — have risen much faster than average.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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