Is Fear Triggering Early Social Security Benefit Claims?

The Social Security Administration (SSA) has received an unusual amount of attention this year. The recently released Social Security Trustees Report confirmed the ongoing challenge of the financing gap facing Social Security’s trust fund. Despite this well-known challenge, many expect Congress and the new administration will continue ignoring the need to shore up Social Security’s financing, despite overwhelming public opinion in favor of acting now. Unfortunately, this is a familiar story in recent decades.

Social Security’s combined trust funds are estimated to have enough revenue to pay scheduled benefits and costs until 2034, with the trust depleted one year earlier thanprojected in last year’s trustees report. Absent a fix, the program will be forced to reduce retirement benefits by almost one-fourth in less than a decade.

For context, the average Social Security monthly check for retired workers was $2,002.39 as of May 2025. So that could look like an almost $500 reduction in monthly income for a retiree receiving income at that level. Keep in mind, millions of retirees rely heavily or solely on Social Security to pay their living costs in retirement. Such a drastic income reduction would be a tough pill to swallow at a time of soaring inflation, rising housing and medical costs, and longer lifespans.

A new issue that has cropped up relates to a recent rise in early claiming of Social Security benefits. Both The New York Times and The Wall Street Journal recently reported that the Urban Institute noticed a spike in people claiming their Social Security benefits, often at early ages. While several factors are cited explaining the increase, SSA staff say that much of the rise in early claiming is driven by fear about the future availability of Social Security benefits.

Unfortunately, fear-driven decision making can undermine long-term retirement security. According to the Urban Institute, claiming Social Security at age 62 instead of age 67 (the full retirement age for those born in 1960 or later) translates into a whopping 30 percent reduction in monthly benefits.

Choosing when to retire is perhaps one of the most consequential decisions workers will make during their career – if they even get to make that choice. Many people are forced to retire earlier than planned due to poor health, job loss, or another factor out of their control. But for those who can choose their retirement date, they ideally should choose a time when their financial circumstances are right, rather than let uncertainty or fear drive a decision.

It has long been the case that the plurality of retirees claimed their Social Security retirement benefits at age 62 – the earliest possible claiming age. The drawback, however, is a permanent lifetime reduction in the value of monthly benefits. This reduction is fair because a retiree would receive payments earlier and longer, but locking in the reduction is a serious decision to make.

Certainly, some people just need the money at age 62, and that is the right time for them to claim Social Security. A job loss or health issue essentially forces such decisions on many workers. Fear about the future of Social Security’s financing or staffing shouldn’t be a reason to substantially and permanently reduce retirement income by claiming benefits early, though.

And that fear very well could be increasing because the SSA recently announced significant changes to its customer service procedures. These changes, along with ongoing concerns about the long-term financing gap facing Social Security, may also be triggering anxiety that Social Security might not be there when people file for benefits in the future. As a consequence, Americans may be claiming benefits now to “lock in” benefits even though the certain outcome is to permanently lock in less retirement income.

The analysis of SSA data by researchers at the Urban Institute found a 13 percent increase in the claiming of Social Security benefits so far in fiscal year 2025, although that could rise to a 15 percent increase if the current trends continue. Such an increase in claiming would mean more than half a million Americans claiming their benefits earlier than is optimal to maximize their long-term retirement income.

These early claims run counter to a trend in recent years of people delaying their initial benefit claims. New research from the Center for Retirement Research at Boston College found that, after adjusting for the total number of people age 62 (which had been increasing), the average claiming age for Social Security benefits has shifted to age 64. Waiting to claim benefits is generally considered to be a smart financial move when possible because it guarantees access to higher reliable, inflation-adjusted lifetime income. Thus, the recent trend of claiming benefits at later ages would be considered a positive move, one that may have just been undone by the sudden changes at the SSA and worries about fund solvency.

The increased attention around the SSA seems to be lingering in older workers’ minds. But, it’s important to remember that Social Security has never missed a payment in its nearly 90 year history. Older workers should think twice before making a potentially damaging long-term decision to reduce retirement income just because of fear about staff cuts, changing customer service policies, and program funding. Those policies can change, but a claiming decision lasts forever.