Social Security, overseeing annual expenditures of $1.5 trillion, faces challenges amid shifting demographic trends that pose risks to its sustainability. With potential cuts looming, many older Americans are contemplating accessing their benefits sooner rather than later. However, financial experts caution against this rush, suggesting that individuals should evaluate their health, life expectancy, available financial resources, work status, and marital situation before making a decision.
Evaluating these factors can significantly influence how retirees can maximize their benefits throughout retirement. The urgency is underscored by a recent Bankrate survey revealing that 60% of American workers feel they are falling short in retirement savings. Over a third believe they will require $1 million or more for a comfortable retirement, yet only half feel confident about achieving that goal.
Mike Lynch, a managing director at Hartford Funds, emphasizes the importance of age in claiming Social Security, noting the trade-offs involved. The earliest eligibility age is 62, while the full retirement age (FRA) is 67 for those born in 1960 or later. Claiming benefits at 62 results in about a 30% reduction in monthly payments compared to claiming at 67. Monthly benefits continue to increase by 8% for each year benefits are postponed, up to age 70.
Determining the best time to claim Social Security hinges on personal circumstances, particularly life expectancy. Jaime Eckels, a wealth management partner at Plante Moran, highlights the concept of “breakeven age,” which indicates the point at which higher monthly payments received from delaying benefits equate to the total benefits accumulated if claimed earlier. Though delaying often leads to a larger lifetime payout for those who live beyond this age, it may not be universally advantageous.
Several factors should guide older Americans in deciding when to claim benefits. A financial advisor suggests evaluating alternative income sources, considering outlays and tax implications, and taking into account individual health status and family longevity trends. Single individuals with healthy backgrounds may find benefit in claiming earlier, as it allows for longer collection periods despite the reduced monthly payment.
Marital status adds another layer of complexity. Couples need to strategize their claims based on each partner’s earnings history. For example, the lower earner might claim first to bolster household income, while letting the higher earner’s benefits grow. In situations where one spouse’s benefit is significantly lower, the option to claim spousal benefits—up to half of the higher worker’s benefit—should also be considered.
Another point to bear in mind is the work penalty associated with claiming before reaching FRA. For those who continue to work, earnings exceeding specified limits can reduce Social Security benefits. In 2025, exceeding an annual limit of $23,400 results in a deduction of $1 for every $2 earned over that cap. Deductions transform to a $1 for every $3 earned above a different threshold as individuals approach FRA, after which restrictions cease.
A gap exists between Social Security eligibility at age 62 and Medicare eligibility at 65, which may compel retirees to withdraw a larger portion of their retirement resources—potentially jeopardizing their long-term financial health.
Despite these considerations, many retirees are opting to claim their benefits earlier. Recent data from the Social Security Administration reveals that the most common age for new claims in 2023 was 66, followed closely by 62. Reasons for this trend include immediate income needs, health challenges, a desire to cease working, or the fear that the program might run dry. However, Eckels reassures that fears regarding the program’s viability might be unwarranted, as there are several avenues for stabilizing the system, including increasing payroll taxes or adjusting the retirement age.
Ultimately, making hasty decisions out of fear can lead to adverse financial outcomes, emphasizing the need for careful planning and consideration in retirement strategies.
