US Social Security Retirement Age Raised to 67 Starting 2026—What Does This Mean for You?

Americans may have to wait longer to retire, as the full retirement age is set to increase to 67 years in 2026. President Franklin D. Roosevelt signed the Social Security Act 90 years ago to create an insurance programme that would provide a steady monthly income to Americans aged 65 and older.

From 2026 onwards, US workers will have to wait till they turn 67 before they can claim Social Security cheques without limitations or a drop in payment amounts. The retirement age has been climbing every year after Congress passed reforms that were signed into law by President Ronald Reagan decades ago.

The 1983 amendment to the Social Security Act was implemented during a period of widespread economic strain. The US had faced multiple recessions, and as a result, Social Security benefits payouts started to surpass income from payroll tax contributions, benefits taxation, and interest.

While the original Social Security Act, almost a century ago, was designed when life expectancy was 61 years, with fewer retirees, Americans were living much longer by 1983, as the average life expectancy increased to over 74 years. Today, it is 79 years old. The ratio of workers to retirees also shrank dramatically over the decades to 2.8 in 2013 from 8.6 in 1955.

The amendment ensured that the full retirement age increased by two months every year, starting in 1991. Those turning 65 in 1991 had to wait until 65 years 2 months. The next year, the full retirement age was 65 years and 4 months.

Note that from 1996 through 2007, workers turning 65 had a full retirement age of 66 years. In the following years, the retirement age continued to rise by two-month increments annually until it reached 67 for those turning 65 in 2026 and after.

Retiring at 62 Could Lower Income by 30%

Many people are claiming Social Security benefits as soon as they become eligible at 62 years of age amid rising living costs, concerns about benefits continuity, or deteriorating health.

As a result, early claims lock you into a lower monthly income for life. Those born in 1959 will be the first to face a full retirement age of 67. However, income levels increase each year a claimant waits past the FRA until 70.

The Social Security Administration estimated that the income for those claiming benefits at 62 can be 30% lower compared to recipients claiming at full retirement age.

However, a recent report from the Social Security Board of Trustees stated that the Social Security Trust Funds, comprising Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), will have sufficient revenue to pay 100% of all scheduled benefits and cover administrative costs until 2034.

Beyond 2034, the combined trust funds will have the income to support only 81% of the scheduled benefits if Congress does not intervene. A 19% drop in benefits could result in severe financial hardship for millions of retirees. Considering the average Social Security cheque size in January of £1,452 ($1,976), a 19% reduction would lower income by £276 ($376) monthly to £1,175 ($1,600).

The top reason Social Security funds could run dry within a decade is that the reserves continue to decline every year, falling by £49.24 billion ($67 billion) to £1.99 trillion ($2.72 trillion) in 2024 as total programme costs exceeded annual income. The report said the Social Security costs have consistently exceeded its non-interest income since 2010.