Big Social Security Change: New US Retirement Age Proposed

New US Retirement Age Proposed – As life expectancy continues to increase, proposals to raise the Social Security full retirement age (FRA) to 70 have gained traction as a potential solution to address the program’s looming financial shortfalls. If enacted, these changes would require workers to delay claiming benefits until age 70 to receive full payouts or face larger reductions for early retirement claims.

While raising the FRA could extend the solvency of Social Security, it also raises concerns about equity and feasibility, particularly for low-income workers and those in physically demanding jobs. Without reforms, the Social Security Trust Fund is projected to only cover 83% of scheduled benefits by 2035 , underscoring the urgency of addressing this issue.

This article explores the implications of raising the FRA, potential alternatives, and strategies individuals nearing retirement can adopt to mitigate financial impacts.

Also Read: $1,300 Monthly Social Security Cut – Check Eligibility & Date

Chart: Impact of Raising the Full Retirement Age (FRA) to 70

Note: Figures are estimates based on current projections and proposals.

The Case for Raising the Full Retirement Age

The push to raise the full retirement age (FRA) stems from demographic shifts and economic realities. As medical advancements and healthier lifestyles extend life expectancy, retirees are drawing Social Security benefits for longer periods. In 1940, the average life expectancy at age 65 was about 12.7 years ; today, it exceeds 20 years . This trend places significant strain on the Social Security system, which relies on payroll taxes from the working population to fund retiree benefits.

Why Raise the FRA?

• Increased Longevity: With people living longer, delaying the FRA aligns with the reality that retirees will need benefits for an extended period.
• Financial Sustainability: Raising the FRA reduces the total amount paid out over a retiree’s lifetime, helping to extend the solvency of the Social Security Trust Fund.
• Phased Implementation: To minimize disruption, any increase in the FRA would likely be phased in gradually, affecting younger workers more than those nearing retirement.

However, while raising the FRA may address financial shortfalls, it also presents challenges for certain groups of workers.

Disproportionate Impacts on Vulnerable Populations

Raising the FRA to 70 could disproportionately affect specific demographics, including:

1. Low-Income Workers

• Many low-income workers rely heavily on Social Security as their primary source of retirement income. Delaying the FRA would force them to either work longer or accept reduced benefits if they claim early.
• For those unable to continue working due to health issues or limited job opportunities, this change could lead to financial hardship.

2. Workers in Physically Demanding Jobs

• Individuals in labor-intensive professions, such as construction, manufacturing, or healthcare support, often face physical limitations as they age. Requiring them to work until 70 may not be feasible, leaving them with diminished benefits if they retire early.

3. Racial and Gender Disparities

• Minority groups and women, who tend to have shorter life expectancies and lower lifetime earnings, may benefit less from delayed retirement. This creates inequities in how the policy impacts different populations.

Alternatives to Raising the Full Retirement Age

While increasing the FRA is one approach to addressing Social Security’s financial challenges, other solutions could achieve similar goals with fewer adverse effects:

1. Increasing Payroll Taxes

• Raising the payroll tax rate from its current 6.2% (paid by both employees and employers) could generate additional revenue to fund benefits. Alternatively, lifting or raising the wage cap —currently set at $160,200 in 2023—would ensure higher earners contribute more to the system.

2. Adjusting Benefits for High Earners

• Reducing benefits for high-income retirees through means-testing or progressive formulas could preserve payouts for low- and middle-income beneficiaries while reducing overall expenditures.

3. Enhancing Cost-of-Living Adjustments (COLA)

• Reforming COLA calculations to better reflect retirees’ spending patterns—such as adopting a “chained CPI”—could slow the growth of benefits over time, extending the trust fund’s lifespan.

4. Combination of Measures

• A balanced approach combining modest FRA increases, payroll tax adjustments, and targeted benefit reforms could address solvency concerns while minimizing negative impacts on vulnerable populations.

Preparing for Potential Changes: Strategies for Individuals

Given the uncertainty surrounding Social Security’s future, individuals nearing retirement should take proactive steps to mitigate potential financial impacts:

1. Stay Informed

• Monitor legislative developments related to Social Security reform. Understanding proposed changes allows you to adjust your retirement plans accordingly.

2. Delay Claiming Benefits

• If possible, delay claiming Social Security benefits beyond your FRA. Each year you wait increases your monthly payout by 8% , up to age 70, maximizing your guaranteed income stream.

3. Boost Retirement Savings

• Contribute to employer-sponsored retirement plans like 401(k)s or personal savings vehicles like IRAs . Building a robust nest egg reduces reliance on Social Security.

4. Explore Part-Time Work

• For those unable to delay retirement, part-time employment can supplement reduced Social Security benefits. Flexible jobs in retail, consulting, or freelancing offer opportunities for older adults.

5. Consult a Financial Advisor

• A certified financial planner can help you develop a personalized strategy to navigate the challenges posed by potential FRA increases. They can also assist with tax planning and estate management.

Real-Life Example: Adapting to a Higher FRA

Let’s consider two hypothetical scenarios to illustrate how individuals might adapt to a raised FRA:

• Maria , a 55-year-old administrative assistant, learns that the FRA will rise to 70 for her cohort. She decides to maximize contributions to her workplace 401(k) and delay claiming Social Security until age 70. By doing so, she secures a higher monthly benefit and builds a supplemental income source.
• John , a 60-year-old construction worker, realizes he cannot continue working until age 70 due to physical demands. He opts to claim benefits at age 62, accepting a reduced payout but supplementing his income with part-time consulting work. He also reviews his budget to prioritize essential expenses.

These examples demonstrate how early planning and strategic decisions can help individuals adapt to changing retirement landscapes.

Also Read: IRS Confirms $3,379 Average Refund for 2025 – Did You Get Yours?

Broader Implications of Raising the FRA

While raising the FRA aims to ensure Social Security’s long-term viability, it carries broader societal implications:

1. Increased Economic Inequality

• Policies that disadvantage low-income and physically demanding job workers could exacerbate existing inequalities, widening the gap between affluent and disadvantaged retirees.

2. Workforce Dynamics

• Delaying retirement may lead to older workers remaining in the labor force longer, potentially limiting opportunities for younger generations entering the workforce.

3. Public Perception

• Any changes to Social Security must balance fiscal responsibility with public trust. Perceived inequities in reform measures could erode confidence in the program.

Conclusion

Raising the Social Security full retirement age (FRA) to 70 is a contentious yet viable solution to address the program’s financial shortfalls amid rising life expectancy. While it offers a path to extending solvency, it also poses significant challenges for vulnerable populations. Policymakers must carefully weigh the trade-offs and explore complementary reforms, such as increasing payroll taxes or adjusting benefits for high earners, to create a balanced approach.