Sanela
The U.S. government is preparing for a major shift in Social Security and Supplemental Security Income (SSI) rules.
This move could potentially strip benefits from around 400,000 Americans, reducing their annual payments by nearly $4,600.
The change is tied to a significant update to the Full Retirement Age (FRA), which will affect millions of future retirees.
What Is the New Retirement Age?
Social Security was first enacted in 1935 under President Franklin D. Roosevelt with a retirement age of 65. At that time, the average life expectancy was just 61 years, which meant most people did not collect benefits for long. However, Americans now live nearly two decades longer, creating new financial pressures on the system.
Starting in 2026, the FRA will officially be 67 for everyone born in 1960 or later. This change reflects adjustments over the past decades to align benefits with longer life expectancy and the growing financial strain on the program.
Official FRA by Birth Year
| Birth Year | Full Retirement Age (FRA) |
|---|---|
| 1960 or later | 67 years |
| 1959 | 66 years and 10 months |
| 1958 | 66 years and 6 months |
| 1957 | 66 years and 4 months |
| 1956 | 66 years and 2 months |
| 1943–1954 | 66 years |
| 1942 or earlier | 65 years or lower |
Note: Those born on January 1 should refer to the previous year for their FRA.
When Should You Claim Your Social Security Benefits?
Determining when to claim Social Security is one of the most crucial financial choices for retirees. Your payout varies significantly depending on the age at which you start claiming:
| Age When Claimed | % of Full Benefit | Example Monthly Payment |
|---|---|---|
| 62 (earliest age) | 70% | $1,260 if full is $1,800 |
| 65 | 87% | $1,560 |
| 67 (FRA) | 100% | $1,800 |
| 70 (max delayed age) | 124% | $2,323 |
- Early retirement leads to a 30% reduction in payouts.
- Delaying until 70 increases payments by 8% per year beyond FRA.
- No increases apply after 70.
Why the Retirement Age Increased
The move to a retirement age of 67 traces back to the 1983 Social Security Amendments, passed to prevent a looming funding crisis. At that time, benefit costs outpaced revenue, risking trust fund insolvency.
To balance the system, Congress gradually increased the FRA starting in 1991, adding two months per year until it reaches 67 in 2026. This change reflects the modern reality: retirees live longer, while the worker-to-beneficiary ratio has dropped from 42:1 in 1945 to just 2.7:1 today.
Social Security’s Financial Outlook
Despite these reforms, Social Security faces long-term funding pressure. Current projections suggest the trust fund could be depleted by 2034. If that happens, benefits would be cut by about 20% to match payroll tax revenue.
Lawmakers are considering several reforms:
- Raising payroll tax contributions
- Increasing the retirement age further
- Revising benefit formulas
While none of these proposals are official yet, they highlight the need for individuals to plan proactively for retirement.
Key Points to Remember
- FRA is 67 for everyone born in 1960 or later.
- Claiming at 62 cuts payouts by up to 30%, while waiting until 70 boosts them by 24%.
- Payout amounts depend heavily on when you start claiming benefits.
- Social Security could face 20% cuts by 2034 unless Congress intervenes.
Social Security remains a cornerstone of financial security for millions of Americans. With the new retirement age now set at 67, retirees must carefully weigh their claiming options.
By understanding how payouts change by age, the risks of early retirement, and the potential advantages of delaying benefits, individuals can make smarter decisions to ensure long-term financial stability during retirement.
FAQs
Starting in 2026, the full retirement age (FRA) will be 67 for anyone born in 1960 or later.
Claiming at 62 reduces your benefits by about 30% compared to waiting until your full retirement age.
Yes, if no reforms are made, the trust fund could run out by 2034, triggering automatic benefit cuts of about 20%.