Claiming Social Security as soon as possible might be tempting for many Americans nearing retirement. After all, you have spent most of your lifetime working and contributing to the Social Security system and want to start enjoying the fruits of your labor. However, new government figures reveal that claiming Social Security early might not be a good idea as it could cost you tens of thousands over your lifetime.
Claiming at 62 Could Slash Your Monthly Benefit by 30%
The Social Security Administration (SSA) calculates retirement benefits based on your Primary Insurance Amount (PIA), which is the sum you are eligible for if you claim at your full retirement age (FRA), which is 67 for most current workers.
However, you do not have to wait until your 67; instead, you can claim as early as age 62, but doing so might permanently reduce your monthly benefit. The government reduces your monthly payment by 5/9 of 1% for each of the first 36 months before your FRA and 5/12 of 1% for every additional month beyond that. This equals a 30% reduction for claiming at 62 instead of 67.
The $620-a-Month Gap Between Claiming Early and Waiting
According to recent SSA data, the average retiree who claimed Social Security benefits at their FRA received $1,930 per month in 2024. On the other hand, a retiree who claims at 62 got just $1,342, which is a $588 difference per month.
When you factor in a 2.5% COLA for 2025 and the 2.8% COLA for 2026, the difference widens even more. After the increases, the benefit for the 67-year-old rises to about $2,034 per month, while that of the 62-year-old rises to $1,414.
The difference also rises to $620 per month, which is the penalty for filing five years before the FRA. In a year, the 62-year-old will have lost $7,440.
Why the Penalty Exists
The Social Security system is based on longevity and fairness. Whether you claim early or delay, the system assumes that all recipients who live to average life expectancy will receive roughly the same lifetime benefit.
Those who claim early will collect more checks, but each one gets smaller, while those who delay collect fewer checks, but they are larger. The trade-off works, but only if you live long enough to balance it out.
When Claiming Early Might Still Make Sense
While claiming benefits early is not typically recommended because one loses out on some amount, it is still reasonable to claim early due to certain circumstances. Some retirees have no choice but to claim at 62. Here are some of the reasons why it is okay to claim early:
a) Health issues – Due to life-threatening health issues, it might be unrealistic to delay claiming Social Security benefits.
b) Caregiving responsibilities -Due to responsibilities such as looking after an aging parent or spouse, one could be forced into early retirement.
c) Limited savings – Due to insufficient lifetime savings, one may have to claim benefits early to cover daily expenses.
In these situations, claiming Social Security benefits early can be a lifeline, even if it means receiving smaller checks permanently.
When Delaying Your Claim is the Smarter Move
When you are in good health and can afford to wait until your Full Retirement Age (FRA), delaying your claim can boost your lifetime checks by a lot. If your FRA is 67, waiting until age 70 can increase your benefits by up to 124% of your full benefit.
How to Find Your Optimal Claiming Age
You can tell how waiting until your FRA may pay off in the long run by reviewing your estimates in your “my Social Security” account. Start by comparing your expected monthly payments at age 62, 67, and 70, and multiply each by the number of years you estimate to collect your benefits.
For example, if you are currently receiving $1,400 per month at age 62, you would collect about $470,400 if you live and receive benefits up to age 90. Waiting until 67 would increase that total to $552,000. Delaying until 70 could raise it to roughly $595,200. The amount you receive for claiming at 70 and 67 is still more than when you claim early at 62, despite collecting for fewer years.
These estimates show that waiting for just a few more years can significantly increase your lifetime Social Security income.