Suze Orman says a 'subtle' new Social Security law can increase your lifetime payouts by 76%

Under the Claiming Age Clarity Act, introduced in 2025, the Social Security Administration will change how it describes three key claiming ages: 62, 67 and 70. The new labels — Minimum Monthly Benefit Age, Standard Monthly Benefit Age and Maximum Monthly Benefit Age — are designed to make it clearer how waiting to claim can increase your monthly payments.

In a Nov. 5 blog post, Orman explained that someone born in 1960 or later, but starts collecting at 62, only receives 70% of their full retirement benefit. Waiting until you’re 67 means you receive 100%, while delaying until 70 increases that figure to 124%.

That’s a potential 76% difference between claiming at the earliest and latest stages. While the legislation doesn’t actually increase anyone’s benefits, Orman believes the change in terminology could encourage more Americans to think more carefully about retiring early.

“Studies show that something seemingly as subtle as a word change can impact our choices. It’s just human nature,” Orman wrote. “We are influenced by how things are framed for us. And this new wording is designed to nudge you to be more aware of the payment trade-offs you make when you claim at a younger, rather than an older, age.”

Claiming Age Clarity Act would rename 62, 67 and 70

Social Security is designed so that you pay into it over the course of your working career. You pay a percentage of your earnings each year. If you earn more than $184,500, you only pay Social Security taxes on that amount. Once you hit retirement age, you start collecting money.

But how do you decide what your retirement age is? There’s no set age when people have to stop working; some people build up a nest egg so they can retire early, and some people keep working as long as possible.

For most people, though, the most important factor when timing their retirement is money.

There are plenty of ways you can save for retirement, but many of them are tied to how old you plan to be when you retire. Social Security has three age brackets at 62, 67 and 70. Right now, those age brackets are called “Early Eligibility Age,” “Full Retirement Age,” and “Delayed Retirement Age.” However, those terms don’t really tell you what sort of benefit you can expect to get at each age.

“I continue to recommend that the longer you can wait, the better, assuming you do not have an illness that you think will dramatically shorten your life,” Orman wrote. “That is still true today. Yes, we need Congress to address the 20% or so shortfall Social Security will have in six or seven years. But as I explained a few months ago, the math of claiming earlier out of fears of any potential benefit cuts just doesn’t add up.”

Rep. Lloyd Smucker, who sponsored the bill in the House, is confident that it will make it easier for Americans to understand their retirement options.

“The Claiming Age Clarity Act replaces confusing government terminology with language that better explains how the age at which someone claims Social Security affects their monthly benefit,” he said in a press release.

Social Security insolvency is a looming threat

Even if the new language makes it easier to decide when you should retire, the larger issue is that it could affect how much you earn in retirement.

The Social Security taxes you pay each year are invested in special-issue securities that are issued by the government. By the time you retire, those securities should have made enough money to fully cover your retirement.