Order Code 94-622
Updated June 7, 2000
CRS Report for Congress
Received through the CRS Web
Social Security: Raising the Retirement Age
Background and Issues
Geoffrey Kollmann
Domestic Social Policy Division
Summary
The Social Security “full retirement age” — the age at which retired workers, aged
spouses, or surviving aged spouses receive benefits that are not reduced for “early”
retirement — will gradually rise from 65 to 67 beginning with people who attain age 62
in 2000 (i.e., those born in 1938). Early retirement benefits will still be available
beginning at age 62 (age 60 for aged widows and widowers), but at lower levels.
To help solve Social Security’s long-range financing problems, it has been proposed
that these ages be raised further. Bills introduced in the last four Congresses would,
among other things, accelerate the phase-in of the increase in the full retirement age to
67, raise the early retirement age to 65 or 67, and raise the full retirement age to 69 or
70. This report will be updated to reflect any legislative developments.
Background
The original Social Security Act of 1935 set the minimum age at which workers could
receive Social Security retirement benefits at 65. The reason for this choice is not clear,
but it is often said that age 65 was selected because it was used in most state old-age
assistance plans and in many pension plans and foreign social insurance programs. In
1956, Congress lowered the minimum age to age 62 for women, but also provided that
benefits taken before age 65 would be permanently reduced to account for the longer
period over which benefits would be paid. This “actuarial reduction” is 5/9 of 1% for each
month benefits are received before age 65 — a 20% reduction at age 62. Congress
extended this “early retirement” provision to men in 1961. In 1972, Congress set aged
widow(er)’s benefits at 100% of the deceased worker’s benefit if elected at age 65 or later.
Reduced widow(er)’s benefits could be elected as early as age 60 (the reduction is 19/40
of 1% per month — a 28.5% reduction at age 60).
Beginning in the mid-1970s, raising the retirement age was studied by several
advisory panels. The initial impetus for these studies was concern over projections of
growing long-range deficits in the program. A major part of the problem reflected a
declining ratio of workers to retirees. Forecasts showed that, whereas a little more than
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three workers were supporting each recipient then, only two would do so in the next
century. It was argued that increasing the retirement age would offset this decline, thus
bolstering the financing of the program. It also was argued that it would properly
recognize the substantial increases in longevity that had occurred and were projected to
continue.
Raising the full retirement age to 67. When Congress enacted legislation in 1983
(P.L. 98-21) to solve Social Security’s financing problems, it included a provision that
gradually will raise the full retirement age (the age at which one receives unreduced
benefits) from age 65 to age 67. It does so in two steps. First, the full retirement age
(FRA) will increase by 2 months for each year that a person is born after 1937 (i.e., attains
age 62 after 1999), until it reaches age 66 for those who were born in 1943 (who attain
age 62 in 2005). Second, it will increase again by 2 months for each year that a person is
born after 1954 (i.e., attains age 62 after 2016), until it reaches age 67 for those who were
born after 1959 (who attain age 62 after 2021). Early retirement still will be available, but
benefits will be lower, e.g., the actuarial reduction in retirement benefits ultimately will be
30%, instead of the present 20%, at age 62. The age for full benefits for aged spouses and
widow(er)s likewise will rise to 67.
Table 1. 1983 Changes in the Social Security Retirement Age
Full retirement age
Year of birth
Year age 62
(year/month)
Reduction at age 62
before 1938
before 2000
65
20.0%
1938
2000
65/2
20.8
1939
2001
65/4
21.7
1940
2002
65/6
22.5
1941
2003
65/8
23.3
1942
2004
65/10
24.2
1943-1954
2005-2016
66
25.0
1955
2017
66/2
25.8
1956
2018
66/4
26.7
1957
2019
66/6
27.5
1958
2020
66/8
28.3
1959
2021
66/10
29.2
1960 & later
2022 & later
67
30.0
In 1983, it was projected that the new provision would reduce Social Security’s long-
range costs by slightly more than 5%. This, combined with other measures contained in
P.L. 98-21, was projected to balance Social Security’s income and outgo over the next 75
years. Since 1983, Social Security’s financial picture has worsened. Under the latest “best
estimate” of the Social Security Board of Trustees, the program will be insolvent by 2037.
Over the next 75 years the program’s “actuarial balance” is equal to -1.89% of taxable

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earnings.1 Said another way, the program’s expenditures are projected to exceed its
income by 14%. Combined with growing concern about the cost of “entitlement”
programs generally, this long-range problem has renewed interest in examining changes
in the retirement age.
Arguments For Raising the Retirement Age
Advocates of raising the retirement age point out that life expectancy has improved
significantly since Social Security was enacted. When benefits were first paid in 1940, a
65-year-old on average lived about 13 more years. In 2000, a 65-year-old is expected to
live about 18 more years, and it is projected that by 2030 a 65-year-old will live 20 more
years. They cite these longevity increases, as well as improvements in the health of the
elderly, as a reasonable basis for encouraging workers to retire later. Also, they highlight
the savings it would produce. According to the Social Security Administration, raising the
FRA to 70 in 2029 would reduce long-range costs by about 6%.
Proponents of raising the retirement age say that it is an equitable way to control the
program's costs, because it would give the people affected time to adjust their retirement
plans. They contrast this with cuts in benefits for current retirees, such as restraints on
cost of living increases, that would impose the burden on elderly people who have few
options for offsetting their losses. It is argued that current workers would probably prefer
a change in the retirement age, to which they could adjust by lengthening their work
careers or by increasing savings to supplement Social Security, to an increase in their
Social Security taxes. Proponents portray raising the retirement age as unlike a benefit
cut, because full benefits still would be payable — people just would receive them later.
Arguments Against Raising the Retirement Age
Opponents of raising the retirement age say that it is simply a cut in benefits, which
would unfairly penalize workers who planned their retirement based on current law. They
aver that the burden would be concentrated on those unable to work until later ages
because they are unemployed or work in arduous occupations. They maintain it would
adversely affect those racial minorities that have relatively shorter life spans. They dispute
that increased longevity necessarily corresponds with ability to work at later ages —
people may be living longer, but with more chronic illnesses and impairments.
Opponents also disagree that it would be better to place the burden on current
workers rather than current recipients. They point out that today’s retirees receive a better
deal from the program than will today's workers. For example, a person who always
earned average wages and who retires at age 65 in 2000 recovers the value of the
1 Taxable earnings is the amount of wages or self-employment income that are subject to the Social
Security tax. For long-range forecasting, Social Security’s income and costs are expressed as a
percentage of taxable earnings. Measuring the program’s income and outgo over long periods (75
years) by describing what portion of taxable earnings they represent is more meaningful than using
dollar amounts, because the value of the dollar changes over time. The system’s long-range costs
and income are projected to be 15.40% and 13.51% of taxable earnings, respectively, a difference
of 14%. To restore actuarial balance, revenues would have to be raised and/or outgo reduced by
the equivalent of 1.89% (15.40-13.51) of taxable earnings.

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retirement portion of his and his employer’s Social Security taxes plus interest in 17 years
— this payback time expands to 25 years for a similar individual retiring in 2020. Also,
as Social Security is subject to the income tax only if a recipient’s income is above certain
thresholds, the benefits of 68% of current recipients are exempt from taxation. As these
thresholds are not indexed, it is projected that eventually inflation will cause virtually all
future Social Security recipients to pay tax on their benefits. Furthermore, opponents
maintain that it would not necessarily be burdensome to ask current retirees to share in
cutting costs, especially if the measures are targeted on those with higher incomes.
Finally, opponents contend that raising the retirement age would raise costs for the
Social Security disability program. First, it could increase the incentive for elderly workers
to apply for disability rather than wait to attain a more distant retirement age. Second, if
early retirement benefits were still available at age 62, but subject to higher actuarial
reductions, they would become less attractive compared to disability benefits.2 (For more
about raising the retirement age, see GAO report Social Security Reform: Implications of
Raising the Retirement Age, HEHS-99-112, August 1999. For more about changing the
early retirement age, see CRS Report RL 30558, Social Security: A Discussion of Some
Issues Affecting the Early Retirement Age, by Geoffrey Kollmann.
Proposals and Options
Legislative Proposals in the 104th Congress
S. 825 (Kerrey). Raised the FRA by 2 months per year that a person was born after
1937 (who attain age 62 after 1999), until it reached age 70 for those born in 1967 (who
attain age 62 in 2029) or later. Also raised the early retirement age in tandem, reaching
age 65 for persons born after 1954. For those born after 1967, the full and early
retirement ages would increase by 1 month for every 2 years.
H.R. 3758 (N. Smith). Raised the FRA by 3 months per year that a person is born
after 1937, reaching age 69 for those born in 1953. The early retirement age would have
risen by 3 months per year, reaching age 65 for those born in 1949. The earliest age for
widow(er) benefits likewise would have risen, to age 63 for those born in 1949. After
2015, the FRA would have been adjusted so as to maintain a constant ratio of projected
life expectancy at the FRA to potential working years, and the early retirement age would
have been adjusted to be 4 years (6 years for widow(ers)) lower than the FRA.
2 Disability benefits are computed similarly to retirement benefits, but are calculated as if the
worker attained the full retirement age in the year he or she became disabled. Thus, if a worker
between the ages for early retirement and full retirement can qualify for disability, the disability
benefit can be significantly greater than the actuarially reduced retirement benefit. For example,
if a worker today could qualify for disability at age 62, his or her benefit would be 26% higher than
if he or she received early retirement benefits. For people whose full retirement age will be 67, this
difference would grow to 43%.

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Proposals by the 1994-1996 Advisory Council on Social Security
In January 1997, the last Advisory Council on Social Security3 issued a report on
recommendations to solve Social Security’s long-range financial problems. Although it
split into three factions because it could not agree on a single set of proposals, two of the
factions recommended that the increase in the FRA to 67 in current law be accelerated, so
that it would be fully effective in 2016 (instead of 2027), and indexed thereafter to
increases in longevity. One of these two factions also recommended that the early
retirement age be raised in tandem with the FRA until it reached age 65, where it would
remain, but with increased actuarial reductions as the FRA continues to increase.
Legislative Proposals in the 105th Congress
S. 321 (Gregg). Raised the FRA and the early retirement age to 70 and 65,
respectively, by 2037, and by one-half month per year thereafter.
H.R. 2768 (Sanford). Raised the FRA to 70 by 2037 in the same manner as S. 825
in the 104th Congress.
H.R. 2782 (Sanford). Raised the FRA to age 70 by 2037, and the early retirement
age to 65 by 2020, both increasing by one-half month per year thereafter.
H.R. 2929 (Porter). Raised the FRA in the same manner as H.R. 2768.
H.R. 3082 (N. Smith). This bill would have raised the full retirement and early
retirement ages in the same manner as H.R. 3758 in the 104th Congress.
S. 1972 (Moynihan). This bill would have raised the FRA to 68 by 2017, and would
have raised it thereafter by 1 month every 2 years until it reached age 70.
S. 2313 (Gregg) and H.R 4256 (Kolbe). Raised the FRA to 70 by 2037 in the same
manner as S. 321, but would have increased it thereafter by one-third month a year.
Legislative Proposals in the 106th Congress
H.R. 251 (Sanford). Raises the FRA by 2 months per year that a person was born
after 1937, reaching age 70 for those born in 1967, and thereafter by 1 month every 2
years. The early retirement age would likewise rise, reaching age 65 for those born in
1954, and rising again beginning with those born in 1968 by 1 month every 2 years.
H.R. 874 (Porter, et al.). Raises the FRA by 2 months for each year that a person
was born after 1937, until it reaches age 70 for those born in 1967 or later. Gradually
increases the reduction for early retirement, reaching 53% for persons born after 1966.
3 The Social Security Act used to require that every 4 years the Secretary of Health and Human
Services appoint an Advisory Council on the Status of the Social Security program. However, P.L.
103-296, which made the Social Security Administration independent in 1995, created a permanent
Advisory Board and abolished future Advisory Councils.

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H.R. 1793 (Kolbe/Stenholm). Raises the FRA by 2 months per year for persons
born from 1938 to 1949, and increases early and full retirement ages by one-half month
per year thereafter. From 2001 to 2005, gradually increases the actuarial reduction for
persons retiring at the early retirement age, reaching 37% for persons born in 1943 and
later.
H.R. 3206 (N. Smith). Raises the FRA by 2 months per year for persons born from
1938 to 1949, and increases it by one-half month per year thereafter.
S. 21 (Moynihan). This bill would restore the FRA to 65.
S. 1383 (Gregg, et al.). Similar to H.R. 1793, but does not change the early
retirement age, and the increase in the reduction for early retirement begins in 2000.
Financial Effects of Proposals to Raise the Retirement Age
The Social Security Administration has prepared the following estimates of the effect
(expressed in percent of taxable earnings) of other variations of raising the FRA. In each
instance, the age is increased by 2 months each year after 1999, and early retirement
remains at age 62 for retirees and aged spouses and age 60 for aged widow(er)s.
Appropriate actuarial reductions for early retirement are made under each proposal.4
Table 2. Effect of Alternative Proposals to Raise the Full Retirement Age
Full retirement
Year fully
Reduction at age
Long-range effect
age
effective
62
67
2027
30.0%
——
68
2023
34.5
+0.56
69
2030
39.0
+0.85
70
2037
43.0
+1.06
71
2044
47.0
+1.22
72
2051
50.5
+1.33
4 An “appropriate actuarial reduction” is that required so that the value of benefits over an average
lifespan is the same regardless of when a person retires. Because these reductions equalize the
costs of early and later retirement, if the early retirement age were raised in these examples, there
would be little or no effect on Social Security’s long-range actuarial balance.

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