Social Security benefits: Claiming early can trigger major impact

As retirement approaches, many Americans face the critical decision of when to claim Social Security benefits.

While the earliest eligibility age is 62, claiming at that point can significantly reduce monthly payments for life.

The average monthly benefit in 2025 is approximately $2,000, but those who wait until age 70 can receive significantly more each month. Despite this, a large portion of retirees continue to claim early, often due to misconceptions or financial pressure.

“Working longer — when possible — has been generally accepted as good advice for a secure retirement,” found a report by the Center for Retirement Research at Boston College. “It directly increases current income; it allows people to contribute more to their 401(k)s; it shortens the period of retirement; and, importantly, delaying claiming of Social Security results in a much higher monthly benefit.”

The Social Security trust fund faces depletion by 2033, which could lead to benefit reductions of over 20% without legislative intervention, according to the Social Security Administration (SSA).

Financial experts have emphasized the importance of delaying benefits to maximize income, especially in light of inflation and rising healthcare costs.

Former NBC “Today Show” financial editor Jean Chatzky, for example, has highlighted the long-term risks of early claiming and the need for strategic retirement planning.

Why early claiming leads to long-term financial loss

Claiming Social Security at age 62 may seem like a practical choice for those eager to retire or facing financial hardship. However, this decision often results in a permanent reduction in benefits.

For example, someone eligible for a Social Security benefit of $2,000 per month at full retirement age (67) would receive only $1,400 if they claim at 62. Over a 20-year retirement, that difference adds up to $144,000 in lost income, according to math calculated using data from the SSA.

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This reduction is compounded by inflation and health care expenses. Medicare premiums continue to rise, and cost-of-living adjustments (COLAs) often fail to keep pace with real expenses.

Retirees who claim early face the risk of relying more heavily on personal savings and retirement accounts, which can deplete faster than expected.

Delaying benefits until age 70 not only increases monthly payments but also provides a form of longevity insurance. For couples, strategic claiming — such as having the higher earner delay benefits — can strengthen household finances and provide greater security in later years.

Experts suggest that a happier retirement can be achieved financially when a retiree chooses to claim Social Security benefits later.

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Understanding the financial impact of Social Security decisions is essential for effective retirement planning. Here are several important data points:

The Social Security Administration reports that the average monthly benefit in 2025 is $2,006.69.
Claiming at age 62 results in a 30% reduction in monthly benefits compared to full retirement age.
Waiting further, until age 70, increases benefits by up to 76% compared to claiming at 62.
The Social Security trust fund is projected to be depleted by 2033, potentially triggering benefit cuts of more than 20% without reform.
Inflation continues to erode purchasing power, and COLAs have not consistently matched real-world expenses.

Financial expert and New York University professor Scott Galloway explains his view that Social Security reform is overdue, and suggests means testing as a remedy. That would entail changing the federal program so that wealthy people, beyond a certain threshold, would not receive the monthly paychecks.

“It's a program that should keep seniors out of poverty,” Galloway wrote. “It shouldn't continue to be a wealth transfer from the young to the old who are already, as an aggregate, the wealthiest generation in history. We need serious reform. We need to dramatically cut the cost.”

That aside, with Social Security policies in place today, retirees should approach Social Security claiming with a long-term strategy.

First, one can calculate projected Social Security benefits using tools provided by the SSA and to consider life expectancy, spousal benefits, and other income sources.

Automation and consistency in savings — through mechanisms like 401(k) contributions and automatic transfers — can help bridge the gap between retirement and delayed Social Security claiming.

Jean Chatzky has emphasized the importance of building a dependable income strategy that includes Social Security, personal savings, and retirement accounts.