Age 70 has become the new 65 for claiming Social Security in terms of lifetime benefit levels, finds a new retirement research brief examining the entitlement program’s structure.
Under current law, retirees can opt to claim Social Security benefits as early as age 62, while the official age has been moved from 65 to 66 and will eventual rise still further to 67.
“In the early 1970s, Congress introduced the Delayed Retirement Credit, which increased monthly benefits for those who claimed after the so-called Full Retirement Age of 65. That credit, which was modest at first, now fully compensates for delayed claiming,” explains Alicia Munnell, director of the Center for Retirement Research at Boston College in an October brief. “As a result, lifetime benefits are roughly equal for any claiming age between 62 and 70, and the highest monthly benefits are available at 70.”
Rising deductions for Medicare and greater benefit taxation have reduced Social Security’s net replacement rates, making a wait until age 70 appear appropriate, according to the brief’s key findings.
But while the shift should be doable for many workers, considering increases in longevity, health, and education, the CRR says, vulnerable workers who are forced to claim early will have lower benefits and will be particularly harmed by any further cuts to the Social Security program.
“Eliminating the Full Retirement Age would dramatically clarify Social Security’s benefit structure,” Munnell concludes in the brief. “It would clearly signal that claiming at age 70 provides the appropriate benefit and would encourage people to work longer.”
Written by Alyssa Gerace