Social Security Faces Benefit Cuts. Could Raising Full Retirement Age Be the Solution?

Seniors on Social Security routinely rely on their benefits to make ends meet. But in about a decade’s time, current beneficiaries could be in for a rude awakening.

In the coming years, Social Security is expected to owe more money in benefits than it collects in revenue as baby boomers exit the workforce in droves. The reason? The program’s primary revenue source is payroll tax funds. Once the labor force shrinks — which is expected to happen as boomers leave it — that funding source will be diminished.

Social Security does have trust funds it can tap for a number of years to keep up with scheduled benefits in the face of declining revenue. But once those trust funds run dry, benefit cuts will be a real possibility seniors will have to grapple with.

Image source: Getty Images.

Worse yet, those benefit cuts may not be so far off. Recently, the program’s Trustees projected that its trust funds could run out of money in a little over a decade.

Lawmakers have floated different solutions to address Social Security’s impending financial crunch. But one solution may not sit well with future retirees.

Could full retirement age increase?

Seniors are allowed to sign up for Social Security beginning at age 62. But full benefits don’t kick in until full retirement age, or FRA. Filing before FRA, rather, results in a reduced benefit throughout retirement.

FRA is not universal. Rather, it hinges on year of birth, as follows:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months

1960 or later


Data source: Social Security Administration.

One idea some lawmakers have proposed is raising FRA for future beneficiaries. Changing FRA from age 67 to age 68, for example, would potentially prompt more people to stay in the labor force an extra year, thereby pumping more payroll tax revenue into Social Security. That could, in turn, help prevent benefit cuts, or at push them off.

Seeing as how life expectancies have increased through the years, this proposal isn’t completely unreasonable. But it’s also an idea that’s unlikely to go over well.

As it is, FRA increases exponentially with age before plateauing at age 67 for those born in 1960 or later. But having to delay retirement an extra year is something workers may not be so quick to embrace.

In fact, right now, Social Security rewards seniors who delay their claims past FRA with an 8% annual boost to their benefits, up until age 70. Yet percentage-wise, few beneficiaries take advantage by postponing their claims until age 70.

In fact, age 62 has long been the most popular age to claim benefits, despite the reduction it entails. If FRA changes, what may happen is that seniors opt to retire at age 67 anyway — and, in doing so, get stuck with a lower monthly benefit for life.

One of many solutions

Raising FRA is only one of multiple ideas that lawmakers have tossed around in an effort to prevent Social Security cuts. Other options include raising or eliminating the wage cap that applies to payroll taxes on earnings and means-testing seniors so that those who are financially well-off get less of a benefit.

But for every solution that’s proposed, there’s an equally valid problem that arises. And so ultimately, it’s going to take some stealth strategizing on the part of lawmakers to prevent a scenario where Social Security cuts are implemented across the board.

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