Could a little wordsmithing by the Social Security Administration (SSA) help older Americans make better decisions about when to claim their retirement benefit — and potentially get a bigger lifetime payment? That’s the idea behind a bipartisan bill now before Congress. If enacted, the Claiming Age Clarity Act would tweak the terms the SSA uses on its website and in other communications to help prospective beneficiaries decide when to apply for Social Security.
Supporters — including AARP, which has endorsed the bill — say these small changes could make a big difference for soon-to-be beneficiaries by clarifying the pros and cons of claiming Social Security at various ages.
For example, starting to receive benefits at 62, the earliest age people can claim, results in monthly payments up to 30 percent lower than what you’d get by waiting until full retirement age, which is 66 and 10 months for people born in 1959 and 67 for those born in 1960 and later.
The SSA currently labels 62 as the “early eligibility age.” The Claiming Age Clarity Act, which cleared the House Ways and Means Committee in mid-September, would change that to “minimum monthly benefit age” to more clearly convey the financial impact.
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Similarly, the term “full retirement age,” when you can claim 100 percent of the benefit calculated from your lifetime earnings history, would become the “standard monthly benefit age.” Age 70, when you can claim your biggest possible monthly payment thanks to Social Security’s “delayed retirement credits,” would be labeled “maximum monthly benefit age.”
“Ensuring that everyone understands what different claiming ages mean for their monthly Social Security will help empower people to make the best financial decisions for themselves and their families,” says Nancy LeaMond, AARP’s chief advocacy and engagement officer.
The bill was introduced in the House by Reps. Lloyd Smucker (R-Penn.) and Don Beyer (D-Va.), and in the Senate by Sens. Bill Cassidy (R-La.), Tim Kaine (D-Va.), Susan Collins (R-Maine) and Chris Coons, (D-Del).
Small changes, ‘measurable effects’
The bill’s sponsors say the current terms are confusing and may contribute to older Americans making poor financial decisions.
“Under the current structure and jargon, it is not apparent to beneficiaries that a worker [who] claims Social Security at age 62, with a monthly benefit of $1,400, could have instead earned $1,500 per month by delaying their claiming by just one year, or $1,600 by waiting two,” Beyer wrote in an Oct. 3 committee report on the bill.