Congress Is Considering This Social Security Change - But It Would Hit These Workers Hardest

Social Security's full retirement age (FRA) is 67 for today's younger workers, and most retirement projections are built around that number.

Several proposals in Washington would push it higher. The change might sound like a technical adjustment, but an extra year or two plays out very differently depending on your job, your retirement goals, and how close you are to claiming. Here's what to know before the proposals move any closer to a vote.

How a higher retirement age changes benefits

Social Security's full retirement age, or FRA, is the age at which you can receive your full benefit. For workers born in 1960 or later, that age is currently 67. Benefits can still be claimed as early as 62, but doing so comes with a permanent reduction.

A higher full retirement age would make that reduction larger. For example, if the FRA increased from 67 to 69, a worker claiming at 62 would be claiming benefits even earlier relative to the new retirement age. Instead of a 30% reduction, the cut would rise to about 40%.

Some workers would choose to wait longer to avoid the larger reduction. That approach can preserve a higher monthly benefit, but it also means collecting Social Security for fewer years.

The result is that many workers would receive less from Social Security over their lifetime, either through smaller monthly checks, fewer years of payments, or a combination of both. That is why economists often view a higher full retirement age as a benefit reduction, even though the benefit formula itself does not change.

What Congress is actually considering

Lawmakers have discussed several ways to raise Social Security's full retirement age, though none of the proposals has become law.

One of the most frequently analyzed options would gradually increase the full retirement age from 67 to 69 for workers born between 1965 and 1972. Under that approach, benefits could still be claimed as early as 62, but the latest claiming age would move from 70 to 72.

A separate CBO budget option from late 2024 would raise the FRA to 70 for workers born in 1981 or later.

Not every proposal applies the same rules to everyone. One plan put forward by Rep. Steny Hoyer and Wendell Primus would raise the full retirement age only for higher earners, eventually reaching age 70 for the top 20% of workers while leaving disability and survivor benefits unchanged.

Proposals to raise the retirement age have also appeared in budget plans from the Republican Study Committee, though those documents do not spell out exactly how the changes would work.

The workers who could be hit the hardest

A higher full retirement age affects everyone on paper, but the impact is often greatest for workers who have limited ability to keep working into their late 60s.

More than 20% of Social Security beneficiaries between ages 62 and 64 have health conditions that limit their ability to work, according to Social Security researchers, and about 12% would meet the agency's disability standard. For many of these workers, retiring early is a necessity rather than a choice.

The same reality can apply to jobs that become harder to perform with age. Research from the Urban Institute has found that physically demanding work is more common among workers without a college degree, who also tend to have shorter life expectancies than higher-income workers.

Years spent caring for children or aging parents can create another disadvantage. Lower earnings or time away from the workforce often lead to smaller Social Security benefits, leaving less room to absorb the effects of a higher full retirement age.

What this could mean for your retirement

Consider a worker who would qualify for a $2,400 monthly benefit at today's full retirement age of 67.

If the full retirement age increased to 69, claiming at 67 would no longer provide the full benefit. The monthly check would fall to about $2,100, a reduction of roughly $300 per month. Over a retirement lasting from age 67 to 86, that difference adds up to about $74,000.

Waiting until 69 would preserve the $2,400 monthly benefit, but those payments would start two years later. Compared with today's rules, the worker would receive benefits for fewer years, reducing lifetime Social Security income by roughly $58,000.

The tradeoff comes down to whether a household would rather accept a smaller monthly check or spend additional years waiting for the full benefit. Either choice leaves less income than the worker would receive under current law.

Bottom line

A higher full retirement age would affect future retirees in different ways, with the biggest impact likely falling on workers who have the fewest options for delaying retirement.

For anyone still years away from claiming benefits, the debate is a reminder that Social Security is only one part of a retirement plan. The more flexibility you have when retirement arrives, the easier it becomes to adapt if the rules look different from today's.