An increasing number of the older American population are choosing to claim Social Security benefits earlier than in past years, a decision experts warn could have serious financial consequences down the road.
A Sharp Rise in Claims This Year
According to recent data from the Social Security Administration, (SSA) retirement benefit claims have jumped 13% in the current financial year compared to the same period last year. This is an increase of approximately 320, 000 new claims. That’s a sharp contrast to the average 3% annual increase seen from 2012 to 2024, based on research from the Urban Institute.
Experts are especially concerned because many of these new claimants are choosing to start benefits before reaching full retirement age and this can lock in lower monthly payments for life.
Political Anxiety May Be Fuelling Early Claims
Even though the increase in retiree population is a contributing factor, other factors need to be taken into consideration. According to a recent Gallup poll, public worry over Social Security has hit levels that has not been seen in over a decade.
There are many Americans that are concerned about the governments approach to the SSA. These include reduction in the number of staff and the unverified allegations of fraudulent activities. These developments have sparked confusion and concern among future retirees.
Officials like Joe Biden and Senator Chuck Schumer have raised alarms about the program’s future. Even though the intentions may be to protect Social Security, critics argue that the rhetoric on both sides has added to a climate of fear, potentially leading individuals to act hastily.
Evidence of Widespread Concern
Longer wait times at Social Security offices and increased traffic to the agency’s website are just a few signs that public concern is growing. This increased sense of urgency has caused some people to lock-in lower monthly benefits without fully weighing the long-term consequences. Citizens are afraid that they may not receive benefits.
Other Contributing Trends
Political messaging isn’t the only factor to be considered. Social Security representatives have identified several other reasons for the increase in claims:
- Aging Retirees: A significant number of Americans are now turning 65, naturally pushing up the volume of retirement claims.
- New Benefit Rules: The Social Security Fairness Act has improved benefit calculations for certain public sector workers, encouraging some to file sooner.
- Better notification approach: There has been a significant improvement in making more spouses aware of potential eligibility for higher benefits, prompting earlier applications.
The High Cost of Claiming Too Soon
While benefits are available starting at age 62, doing so comes with a significant drawback: permanently reduced monthly payments. For example, a person turning 62 in 2025 would see their benefit slashed by roughly 30% compared to what they’d receive if they waited until full retirement age (67).
Those who hold off up until the age of 70, are rewarded with an 8% boost for each year they delay. That adds up fast. In 2025, someone retiring at 62 would receive a maximum of $2,831 per month. By waiting until 70, that amount could increase to $5,108 which is nearly twice as much.
Conclusion
The rising number of Americans claiming Social Security early is more than just a trend in the retiree population, it reflects deeper concerns about political factors, economic factors, and misinformation. It can be noted that these fears are justified, but making a decision that is not well thought out, to claim benefits early can have a long-term financial impact. Retirees are urged to make mindful proactive decisions and consider the long-term impact. With proper planning and verified information, individuals can make choices that protect their financial well-being well into retirement.