Bill Crafted to Ease Confusion on Claiming Social Security Heads to White House

If only it were this easy to get broader Social Security reform done. 

The Senate unanimously passed the Claiming Age Clarity Act Tuesday evening. The bill, which cleared the House in December and now awaits signature by the president, would require the Social Security Administration to change the terms it uses to describe the ages at which a worker may claim retirement benefits.

Specifically, the SSA must use the term “minimum monthly benefit age” instead of “early eligibility age” when describing age 62, the youngest at which people can tap benefits. Likewise, the agency must use “standard monthly benefit age” instead of “full retirement age” or “normal retirement age” to describe ages 65 to 67, depending on when they were born. And it must use the term “maximum monthly benefit age” when referencing 70 as the maximum age at which a worker may receive additional retirement credits. Finally, the SSA may not use the term “delayed retirement credit” when discussing people who wait beyond their standard claiming age.

While the changes may seem like minor linguistic nuances, they could have a meaningful impact on the public’s claiming behaviors, according to Jason Fichtner, a former Social Security official and executive director of the LIMRA Retirement Income Institute. 

“This bipartisan bill is not about Social Security solvency,” Fichtner, who advocated for the policy change, told Advisor Upside. “It’s about making sure people have the right information and using terminology that doesn’t bias their decision. These language changes could improve the financial retirement security of millions of future retirees.” 

Words Matter 

For decades, the Social Security administration has used the “early,” “full” and “delayed” terms to describe claiming ages. They make sense from a technical perspective, but can confuse people trying to decide when to take advantage of their benefits. For example, the term “early eligibility age” has a positive ring to it, Fichtner said, but people who claim at 62 meaningfully and permanently reduce their monthly benefit checks. “Who wants to be ‘late’ or ‘delayed’ when claiming?” he asked. 

The stakes are high for beneficiaries: 

• Claiming Social Security at age 62 will result in a permanent reduction of up to 30% in the monthly benefit, per the SSA, with the exact percentage of the reduction depending on the year of birth.
• Waiting until age 70 has the opposite effect, boosting monthly checks by more than 70% compared with claiming at 62.

That’s a Toughie. Industry research shows the question of when to claim Social Security is challenging for many, even if they understand how the government benefits work. While nearly 70% of 1,500 non-retired Americans surveyed by Schroders understood that waiting would result in bigger checks, 45% said they plan to tap their benefits before 67, which is currently the full (ahem, standard) retirement age for those born in 1960 or later. Only 10% said they plan to wait until 70, when benefits hit their maximum.