Millions of seniors today collect monthly benefits from Social Security. And for many, those benefits serve as their sole or main source of income.
Clearly, that's not an ideal situation to be in. But it's reality for a lot of seniors who were never able to save for retirement on their own.
Meanwhile, workers who are approaching retirement with little to no savings are often advised to delay their Social Security claims beyond full retirement age (FRA). FRA is 66, 67, or somewhere in between, and it's when you're entitled to your complete monthly Social Security benefit without a reduction. However, for each year you delay your filing past FRA, your monthly benefits get an 8% boost -- for life.
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You can't accrue those delayed retirement credits forever, though. Once you turn 70, you can't grow your monthly benefits any longer. That's why 70 is often referred to as the final age to claim Social Security, even though you can sign up after that point.
But will Social Security's delayed retirement credits always end at 70? Maybe not. There are a couple of reasons why lawmakers might consider a change to this rule.
1. FRA could shift down the line
Social Security is facing a funding shortfall that could result in benefit cuts. Lawmakers don't want to see that happen, though, so they've proposed different suggestions for pumping more money into the program.
One idea that's currently on the table is raising FRA from 67 to 68 or 69. That buys the program a little more time before it has to pay out benefits to a large group of workers in full.
But if lawmakers were to increase FRA from 67 to 68 or 69, it would, under the current rules, give people in that boat just a year or two to accrue delayed retirement credits. That's hardly fair. As such, if FRA rises, lawmakers may decide that delayed retirement credits can be snagged until age 71 or 72.
2. Seniors without savings need a financial lifeline
It's not a secret that many older Americans today are approaching retirement with little or no savings. In fact, recent Motley Fool research put the median retirement savings among 55- to 64-year-olds at just $185,000. That's better than nothing, but it's also not a ton of money over the course of what could be 20 years or longer.
In fact, if we were to apply the classic 4% rule to a balance that size, it results in an annual income of just $7,400. Even when added to a Social Security benefit, that's not a whole lot.
Because lawmakers are aware that there's a retirement crisis brewing, they may, in time, decide to extend the window for accumulating delayed retirement credits. That would give seniors an opportunity to compensate for a lack of savings via a higher Social Security benefit.
Of course, Social Security's finances would likely need to be seriously shored up before this option could exist. But in time, accruing delaying retirement credits beyond age 70 may be possible.
It's a nice thing that seniors get the option to delay Social Security beyond FRA for a higher monthly benefit. Right now, there's no financial incentive to claim benefits after age 70. But that could potentially change in time.
