The full retirement age (FRA) for Social Security benefits in the United States will increase to 67 starting in 2026, affecting millions of Americans planning their retirement. Those opting to retire early at age 62 could see up to a 30 per cent reduction in monthly benefits.The change stems from reforms signed into law by former President Ronald Reagan in 1983 to address long-term financial challenges facing the Social Security system. The original Social Security Act, introduced by President Franklin D. Roosevelt in 1935, initially set the retirement age at 65.The FRA has been rising gradually since 1991, increasing by two months per year. It reached 66 in 1996 and will reach 67 in 2026 for individuals turning 65 that year and beyond.
Why the retirement age is increasing
When the social security act was created, life expectancy in the US was just 61. By 1983, it had risen to over 74, and today it stands at 79. At the same time, the number of workers supporting each retiree has dropped, from 8.6 in 1955 to 2.8 in 2013, placing greater pressure on the system.The 1983 amendment was designed to address these demographic shifts and extend the program’s solvency.Many Americans claim benefits at age 62 due to financial need, health issues, or concerns about future cuts. However, doing so results in permanently reduced monthly payments. According to the Social Security Administration (SSA), claiming benefits at 62 can result in up to a 30 per cent decrease, while delaying retirement until age 70 can significantly increase monthly payouts.A recent report from the Social Security Board of Trustees warns that the Social Security Trust Funds will have enough revenue to pay full benefits only until 2034. After that, without Congressional action, only 81 per cent of scheduled benefits would be payable. This could reduce the average monthly cheque from $1,976 to about $1,600.In 2024, trust fund reserves fell by $67 billion to $2.72 trillion, as program costs continued to exceed income. The funds have been running a deficit since 2010, raising concerns about the long-term sustainability of social security.