Paper Statements, Word Choices: Encouraging Later Social Security Claims

Legislation proposed in the Senate seeks to reduce the number of seniors leaving Social Security benefits on the table by beginning collection at age 62.

Two senators from both major political parties have proposed legislation that aims to reduce the number of seniors who begin to claim Social Security benefits at age 62, the early-eligibility age, in favor of starting claims between ages 67 and 70 to maximize the amount of money they will receive.

Senator Bill Cassidy, R-Louisiana, first proposed the bill on Tuesday, and it has been co-sponsored by Senators Susan Collins, R-Maine; Chris Coons, D-Delaware; and Tim Kaine, D-Virginia.

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The bill would require the Social Security Administration to mail paper Social Security statements, which describe an individual’s earning history and earned Social Security benefits, in specific intervals: every five years if they are age 25 or older, every two years if they are 55 or older and annually if they are 60 or older.

A statement would also be sent every time a worker changes employers. The bill says individuals could opt out and authorizes funding for the requirement. The administration would have to begin sending statements by January 1, 2025.

While the bill does not mandate specific wording changes, Cassidy sent a letter to the Social Security Administration on March 2 making recommendations about word choice. Cassidy recommended that age 62, currently called the “early eligibility age,” be renamed to “minimum benefit age,” that age 67 be renamed from “full retirement age” to “standard retirement age,” and that age 70 be renamed from “delayed retirement credits” to “maximum retirement age.”

Cassidy said research indicates such changes would increase the number of seniors who opt to claim Social Security later in life. According to his letter, among those aged 65 and older, 40% depend on Social Security for a majority of their income, and age 62 is the most common age at which seniors begin to collect, with 35% of men and 40% of women doing so.

Cassidy cited 2019 research from United Income Inc., which showed that suboptimal decisions about claiming Social Security cost the median household approximately $111,000 per year and that the poverty rate for those aged 70 and older would decline to 7% from 13% if they claimed the benefit at the financially optimal time. The research found that 57% of retirees would build more wealth if they began claiming Social Security benefits at age 70, rather than age 62.