Senators want to discourage retirees from claiming benefits at 62

Does the Social Security Administration (SSA) intend to change the language it uses for those claiming retirement earnings? 

This is the question four U.S. senators posed as they called on the SSA to take more proactive measures to ensure Americans can maximize their earnings in retirement.

“The current terms that the SSA uses to refer to claiming ages and benefits for delayed claiming – ‘early eligibility age,’ ‘full retirement age,’ and ‘delayed retirement credits’ – is confusing to many Americans,” said Senators Bill Cassidy of Louisiana, Tim Kaine of Virginia, Susan Collins of Maine and Chris Coons of Delaware in a letter to SSA.

“Changing the terminology to ‘minimum benefit age,’ ‘standard benefit age,’ and ‘maximum benefit age’ would delay average claiming and increase understanding of Social Security’s claiming design,” they said.

Currently, many retirees are claiming their retirement earnings at the earliest possible time, the senators noted. In 2018, 35% of men and 40% of women claimed the benefits at the Early Eligibility Age – 62.

The maximum benefits are available to those who claim at age 70 or older.

“When to claim Social Security benefits is a critical decision for older Americans planning their retirement. Most people, however, do not claim benefits at the age that would maximize their income in retirement, usually because they claim too early,” the senators said in the letter.

“A large body of evidence has confirmed that delaying claiming past the Early Eligibility Age (EEA) of 62 is financially advantageous for most Americans, as it provides them with a greater monthly benefit for the remainder of their lives.”

In April 2022, Fidelity Investments announced it will allow individuals to allocate part of their retirement savings in bitcoin through 401(k) investment plans. Late last year, the U.S. Department of Labor released a final rule that allows employers to consider climate change investing for their retirement savings.

New legislation

The US Senators have also proposed legislation that aims to help workers better prepare for life in retirement.

The legislation looks to ensure that Social Security beneficiaries receive regular statements from the SSA, and for other purposes.

It aims that by no later than Jan. 1, 2025, the SSA commissioner shall ensure that:

1. Individuals with social security account numbers are mailed a paper social security statement whenever they enter the workforce or start a new job;
2. a paper social security statement is mailed to each individual with a social security account number not less frequently than:
   1. once every 5 years beginning with the year in which the individual achieves age 25;
   2. once every 2 years beginning with the year in which the individual achieves age 55; and 
   3. annually beginning with the year in which the individual achieves age 60
3. individuals with social security account numbers are mailed paper social security statements regardless of whether they have created an online ‘my Social Security’’ account with the Social Security Administration;
4. individuals are able to opt-out from receiving paper social security statements (including statements otherwise required under this subsection).

“Ensuring that more people are better prepared financially for retirement has consistently been one of my priorities,” said Collins. “Our bipartisan legislation would help improve retirement security by providing more details and transparent information to enable hardworking Americans to better plan for retirement and make decisions about when to claim the Social Security benefits they have earned.”

Since June 30, 2022, employers in California with five or more employees have been required to offer a retirement plan. Also, the $1.7 trillion spending bill for 2023 includes provisions known as “Secure 2.0,” which helps workers prepare for their post-career life.