Retirement Social Security

Proposed Solution to Social Security Cuts Has Major Problems

Lawmakers need to find a way to prevent Social Security cuts, but one popular solution has a lot of pitfalls.

By Maurie Backman , Edited by Laura Hohenstein

Updated May 19, 2026

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Whether you're planning to retire early, on time, or late, there's a good chance Social Security will play an important role in your finances. Even though the average monthly retirement benefit today is only $2,081, those monthly checks help keep many seniors afloat.

But Social Security is looking at a revenue shortfall in the coming years. The program gets most of its income from payroll taxes. And a shrinking labor force could strain the system and result in widespread benefit cuts in less than a decade from now.

Raising Social Security's full retirement age is one proposed solution to prevent benefit cuts, but it comes with a world of problems.

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What is full retirement age for Social Security?

Full retirement age is when you're eligible for your monthly Social Security benefits without a reduction. Those benefits are calculated based on your personal wage history. But your filing age plays a role in how much money you get each month.

You can claim Social Security benefits as early as age 62. But for each month you claim benefits prior to reaching full retirement age, those benefits are permanently reduced.

Full retirement age is 67 for people born in 1960 or later. But it hasn't always been 67. In 1983, when Social Security was facing a financial crisis similar to today, lawmakers voted to raise the program's full retirement age from 65 to 67.

Now, some financial experts are proposing to raise the program's full retirement age again as Social Security faces the possibility of benefit cuts in 2032. That's when Social Security's Old-Age and Survivors Insurance Trust Fund (which pays retirement benefits) is expected to run dry, according to the Congressional Budget Office (CBO). The program's Trustees initially put that trust fund depletion date as 2033, but the CBO's projection is more recent and takes tax code changes into account.

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Why raising full retirement age could help

Raising full retirement age forces workers to wait longer to collect their benefits in full. This could benefit Social Security and improve its finances in a couple of ways.

First, workers who retire and claim benefits at 67 would be looking at reduced monthly checks. That's bad for them, but it's good for Social Security, since it saves the program money.

Secondly, raising full retirement age could encourage longer labor force participation. A lot of people can't afford to retire without Social Security, and many can't afford a reduction in benefits. If full retirement age is increased to 68, 69, or 70, a good number of workers would likely stay in the labor force until then.

Social Security's main source of revenue is payroll taxes. So having people work longer allows the program to take in more money.

A backdoor sort of benefit cut

While raising full retirement age might improve Social Security's finances, critics argue that it could function as a backdoor benefit cut of sorts.

The Center on Budget and Policy Priorities says that for each year full retirement age is increased, Social Security recipients face the equivalent of a roughly 7% cut in monthly benefits. The group also says that this change would disproportionately impact retirees with low incomes who rely heavily on Social Security to make ends meet.

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Physical laborers could get hurt the most

Raising Social Security's full retirement age could also severely impact workers in physical jobs. It's one thing to work a couple of years longer to avoid reduced Social Security benefits when you have a desk job. But people who work physical jobs may not be able to continue doing so into their late 60s.

If Social Security's full retirement age is increased, many physical laborers may be forced to retire at 67 because they can't keep working until 68, 69, or 70, thereby sentencing themselves to smaller monthly benefits for life.

Bottom line

Raising full retirement age is only one proposal for preventing widespread benefit cuts. There are other potential solutions Congress could look at, such as raising the payroll tax rate or lifting or eliminating the wage cap that limits the amount of earnings Social Security can tax each year.

But ultimately, lawmakers do need to take some action to prevent Social Security cuts. Many retirees do not have savings to fall back on and need Social Security benefits to cover their costs. If benefits were to be slashed broadly, a large number of seniors could be plunged into poverty.

Unfortunately, pretty much all of the solutions that exist to prevent Social Security cuts come with drawbacks. Lawmakers will need to decide if the financial upside of raising full retirement age is enough to outweigh the pitfalls. And while they may decide on a different approach, you may want to plan for a change to full retirement age in case this proposal goes through.

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