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Retirement Planning > Social Security

What Raising Retirement Age to 69 Would Do to Social Security

By Melanie Waddell

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Raising the retirement age from to 69 from 67 would result in retirees receiving a smaller amount of Social Security benefits over their lifetime, but the reduction in Social Security benefits would improve the program’s finances, according to a just-released report by the Congressional Budget Office.

The report analyzes the effects of phasing in an increase to FRA, starting with Americans born in 1965, until it reached age 69 for workers born in 1972 or later. Reduced benefits would still be available starting at age 62; claming could be delayed until 72. The plan would not change the projected 2034 depletion date of the combined old-age and disability trust funds, CBO found.

The report, requested by House Budget Committee Ranking Member Brendan Boyle, D-Pa., found that Republican Social Security plans would result in “steep benefit cuts for American workers while failing to extend the solvency of the Social Security Trust Fund.”

CBO found that raising the retirement age to 69 — as proposed by the Republican Study Committee, the Heritage Foundation and other Republican groups — would result in an average yearly benefit reduction of about 13% for those subject to the full cut, Boyle said Wednesday, commenting on the report.

Boyle asked CBO how such an increase in the full retirement age (FRA) would affect people’s benefits differently depending on the decade in which they were born, their earnings and their sex.

“All people affected by such an increase in the FRA would receive a smaller amount of Social Security benefits over their lifetime,” the report states.

The report also found that:

  • For workers currently in their 30s and 40s who are subject to the full retirement age increase, the average annual benefit cut would be 13%, or around $3,500 a year.
  • Average lifetime Social Security benefits would be reduced by 8% for those subject to the full increase in the retirement age.
  • Increasing the retirement age would push some beneficiaries to claim disability benefits, modestly increasing expenditures for that program.

“Workers who chose to delay claiming their retirement benefits by the same number of months as the increase in the FRA would receive the same monthly benefit for a shorter period,” CBO said.

“Those workers who claimed retirement benefits at the same age as they would have claimed them under current law would receive a smaller benefit for the same number of years,”CBO said. “The reduction in Social Security benefits would improve the program’s finances.”

Melanie Waddell

@Think_MelanieW

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