Raising the age at which workers can claim Social Security benefits from 67 to 69 could lead to notable cuts in the lifetime benefits received by retirees. A recent assessment from the Congressional Budget Office (CBO) suggests that while this change may result in a slight reduction in the overall spending of the program, it would not be adequate to prevent the predicted insolvency of Social Security by 2034.
Currently, individuals born in 1960 or later are entitled to their full Social Security benefits at 67. If the proposed legislation comes to fruition, the full retirement age will incrementally increase to 69 for those born in 1972 and later. This adjustment means that recipients could expect to receive reduced lifetime benefits, per the CBO’s analysis. For instance, individuals born in 1972 may see their benefits cut by 40% when claiming at the earliest eligible age of 62, compared to a 30% reduction under the present law.
This shift, proposed amid rising concerns about the program’s funding, is taking inspiration from global trends, including countries like China that have already raised their retirement ages. According to the CBO, immediate implications of this adjustment would only impact new beneficiaries—a segment that accounts for about 5% of total Social Security expenditure. The rest of the population would not see changes until they hit retirement age.
This discussion comes at a pivotal time when the Social Security program faces imminent fiscal challenges. The CBO estimates that, despite lowering spending by changing the full retirement age, the actuarial deficit measured against the Gross Domestic Product (GDP) would decrease from 1.5% to 1%, which, while beneficial, won’t stave off insolvency projected for 2034.
Significantly, the proposal includes preserving the earliest retirement age at 62. However, the maximum benefit payout would be pushed to age 72, up from age 70, further incentivizing individuals to delay their benefits for enhanced payouts. For individuals born in the 1970s cohort, the average benefit at age 65 could be about 13% lower compared to current legislation as the impact of the new retirement age begins to take shape.
Experts have weighed in, noting that while this policy might reduce the strain on the Social Security Trust Fund, it is primarily aimed at newer beneficiaries whose retirement decisions would be significantly different from those currently receiving benefits. Voices within the financial community echo concerns that these changes are not a comprehensive solution to the underlying issues facing the Social Security system.
Such measures not only reflect the challenges but highlight the urgency of addressing critical social safety nets that millions rely on for their retirement security. As debates continue within Congress regarding the future of Social Security, the broader implications for American workers—especially as they navigate their own retirement planning—will remain a significant point of focus in the coming years.