Time To Fix Social Security’s Age-Old Misunderstanding

One congressional proposal could simplify an overcomplicated—and misinterpreted—system of claiming Social Security benefits

Confusing. There needs to be more clarity about age in claiming Social Security benefits. Image Credit: Comstock/Getty Images

In 2024, a bipartisan team of U.S. Senators—Bill Cassidy (R-La.), Chris Coons (D-Del.), Susan Collins (R-Maine) and Tim Kaine (D-Va.)—introduced legislation to accomplish something unusual in Washington: namely, to have the federal government communicate clearly to Americans about a key aspect of Social Security. While this effort was not voted on last year, indications are that the senators will try again in the 119th Congress. All Americans who participate in Social Security, whether as beneficiaries or taxpaying workers, should hope that they succeed.

The initiative pertains to how Social Security law describes the ages at which Americans become eligible for different levels of Social Security benefits. To be blunt, the current nomenclature is a mess that causes enormous confusion. This lack of clarity undermines Americans’ understanding of the benefits they can receive under current law as well as under potentially legislated alternatives, thereby interfering with their ability to make informed retirement income planning decisions. As someone who makes a career of analyzing and explaining the operations of Social Security, I can attest that its current bewildering nomenclature triggers the same predictable misunderstandings time and again, and for that reason alone it should be reformed.

What’s My Age Again?

Under current law, Social Security eligibility seems to revolve around something called the Full Retirement Age (FRA), currently 67. When Social Security was first established back in 1935, this FRA was set at 65, but it was gradually adjusted to 67 earlier in this century, pursuant to amendments enacted in 1983. Occasionally, there are discussions of whether this age needs to be further adjusted as part of a package of legislated reforms to preserve Social Security’s solvency.

Whenever Social Security’s FRA is discussed, it creates misimpressions that it represents the age at which one can claim retirement benefits. It actually does not. So when do Americans actually become eligible to claim benefits? That actually happens at something called the Early Eligibility Age (EEA), which is currently 62. Notably, this is actually three years younger than when Social Security was first established, and today, it’s the most common age of initial benefit claim.

This misunderstanding about when Social Security benefits may be claimed becomes even more significant when discussing possible adjustments to the FRA, whether to 68, 69 or higher. Such debates cause Americans to worry unnecessarily that they would have to wait until these more advanced ages to claim Social Security benefits at all. Political opportunists are all too ready to exploit these misunderstandings for their own partisan purposes, disseminating alarming images of aging workers, physically worn down, their eligibility for much-needed retirement benefits cruelly delayed. But none of this is anchored in reality.

Instead of affecting when Americans can claim benefits, the gradual rise of the FRA from 65 to 67 in recent decades simply affects the level of benefits participants can receive at a given age. Social Security flexibly allows participants, at any age after EEA (currently 62), to choose the claim age that works best for them. The earlier you claim, the lower your monthly benefit, and the later you claim, the higher your monthly benefit (up to a point: I’ll get to that). It bears repeating: The FRA (now 67) says nothing about when you can claim benefits, it just tells you the age at which you get a particular benefit level.

In the same way, no hypothetical future change in the FRA would affect when Americans could claim. When Americans can first claim old-age benefits is solely a function of the EEA, which could hypothetically rise by as much as three years (from 62 to 65) and still allow Americans to claim Social Security benefits at younger ages than Social Security’s shorter-lived earliest beneficiaries were allowed to do.

You may now be asking: Though increasing the FRA from 65 to 67 technically didn’t delay the age at which Americans could claim benefits, didn’t it effectively force Americans to work longer by cutting the benefits they could receive at age 65? Actually, no—because one’s benefits at a given age are a function not only of the FRA and EEA, but also of the program’s benefit formula. As it happens, the formula under current law is automatically indexed so that benefits grow each year—specifically, at a rate of growth faster than the effects of the changes in the FRA over the last couple of decades. Americans retiring in 2025 at the age of 65 still receive higher benefits, relative to price inflation, than Americans who retired in 2002 at the age of 65—even though the FRA nominally rose from 65 to 67 during that time. Despite what many might assume, changing the FRA neither forced Americans to delay their retirement, nor did it lower their real (inflation-adjusted) benefits at any given age.

As if this isn’t all confusing enough, there’s more. Surely, the FRA must refer to the age at which you can get your highest (full) benefit, right? Nope—the FRA doesn’t mean that at all. Social Security also has something called the Delayed Retirement Credit, which increases your benefit if you wait to claim up to three years past the FRA (in other words, up to age 70 under current law). For every such year you wait, your benefit increases by 8%.

The most straightforward way to put all this information together is as follows. You become eligible for old-age benefits at 62 (the EEA). That’s the earliest you can claim, and it gives you the smallest benefit. If you wait to claim, you get more. The longer you delay your claim—under current law, up to age 70—the larger your benefit. The current FRA of 67 has no special significance to your decision other than that it would deliver the benefit somewhat arbitrarily regarded as your standard benefit. It’s also worth remembering that from one class of retirees to the next, benefits are automatically increased each year under current law, and these automatic benefit increases outweigh the effects of historical changes to eligibility ages.

Making Things Simpler

This brings me to what Senators Cassidy, Coons, Collins and Kaine are proposing, and why it makes eminent sense. Under their proposal, age 62 would be the “minimum monthly benefit age,” the FRA (again, currently 67) would be the “standard monthly benefit age” and age 70 would be the “maximum monthly benefit age.” This is exactly how one should frame Social Security’s age specifications if one wants Americans to correctly understand them. Putting it as simply as possible: Americans can claim at any age after age 62, and choosing age 62 minimizes their benefit while choosing age 70 (or later) maximizes it.

There are many reasons why the senators’ proposed change is desirable. First, it’s always better for our government to speak clearly and directly to us rather than cryptically, so that Americans can understand how they are affected by government policy.

Second, the change would be immeasurably helpful for Americans’ retirement planning. Americans need to understand that under current law they can claim old age at any age from 62 on, and that their choice can minimize or maximize their benefit, or be somewhere in between. Americans can best plan for their retirement if they have an accurate understanding of what they will get from Social Security and when.

Third, the change would do much to create more responsible political dynamics around Social Security. Political opportunists have long exploited existing confusion over the significance of the so-called Full Retirement Age to sow fear as well as anger over potential changes to it. Unless the Early Eligibility Age—excuse me, the “minimum monthly benefit age”—someday rises by more than three years (to exceed 65), Americans will still be able to claim Social Security benefits earlier than their grandparents could, and to receive larger benefits when they do claim.

Senators Cassidy, Coons, Collins and Kaine have proposed retitling Social Security’s claim ages to straightforwardly convey to Americans what these really mean. In Washington, this type of directness is all too rare, but we should aspire for it to become the norm.