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6 Reasons People Collect Social Security Early

Most older Americans take reduced retirement benefits, even though it often pays to wait

spinner image The top of a yearly statement from Social Security which displays the amount of one's monthly benefit if you wait until full retirement age.
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Most people know that the longer they wait to collect Social Security retirement benefits, the more they’ll bring home each month. But even though they could receive up to 77 percent more by delaying their claim until age 70, most Americans opt to start drawing benefits well before that.

“The idea of taking Social Security payments early is a deliberate one,” says Joel Schiffman, head of strategic partnerships at global investment management firm Schroders, which recently released its latest annual survey on older U.S. investors’ retirement plans.

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According to the study, 86 percent of older Americans who have not yet retired know they will get bigger payments if they delay Social Security, “but only 11 percent say they plan to wait until age 70 to tap into it,” Schiffman says.

Leaving Social Security income on the table may not be ideal in the eyes of retirement experts and financial planners, but it’s common practice for older Americans.

Nearly 30 percent of workers start receiving Social Security at 62, the minimum claiming age and the most popular one, according to a July 2022 Congressional Research Service report — even though it means getting up to 30 percent less than the full retirement benefit calculated from their lifetime earnings history. Well over half claim before their full retirement age (currently between 66 and 67, depending on year of birth), and less than 10 percent wait until 70, when they could lock in their maximum benefit.

Those early filers cite myriad reasons for their claiming decisions, experts say. Here are six of the most common rationales, and some grounds for rethinking them.

1. Social Security will run out of money

A big fear among working Americans is that they will pay into Social Security for decades, only for it to be bankrupt by the time they can collect. Nearly a third of respondents to the Schroders survey cited concern that the program would run out of money or stop making payments as the reason they won’t wait until 70.

The counterargument: Social Security is largely funded by the payroll taxes the vast majority of Americans pay on their work income. It won’t run out of money as long as it keeps collecting those taxes.

Social Security may have to reduce benefits in the near future unless Congress acts to shore up its finances. After years of running surpluses, the program is now paying more in benefits each year than it collects in revenue, making up the difference by tapping into cash reserves in its trust funds. Those reserves will be exhausted by 2034, according to the most recent projections by Social Security’s trustees.

But that doesn’t mean the end of the program, says Denny Artache, a financial adviser at Artache Financial Group in Jupiter, Florida. “Even if they do nothing," he says, "Social Security will have enough to pay about 80 percent of [retirement] benefits until 2095.”

2. Inflation made me do it

Inflation continues to run hotter than it has in decades, making it harder to make ends meet. For many older adults, budgets are under pressure from soaring prices, and cash flow is tight. In this environment, bringing in Social Security income sooner can seem like the nearest available solution.

The counterargument: If you take other steps to deal with rising prices today, such as tapping different income sources or cutting back on spending, you can put off Social Security and get a bigger benefit tomorrow, Artache says — one that, unlike other forms of retirement income, offers continuing inflation protection through annual cost-of-living adjustments, or COLAs.

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3. I won’t live long enough

Many people worry that if they delay claiming, they’ll die before they can get back what they paid into the Social Security system, or that they won’t be able to use the money while they’re still in good health. That’s an especially acute concern for someone who has a chronic illness or family history of disease that could portend a shorter life span.

“One of the biggest reasons [people claim early] is there’s no guarantee they will live, so why leave money on the table,” says Kevin Chancellor, CEO of Melbourne, Florida-based Black Lab Financial Services. “This is some of the mental play that goes into why people choose to take it early even if it’s in their best interest to not [take it].”

The counterargument: Your health and family history should come into play in deciding when to claim benefits. But if you are in good health and take care of yourself, you stand a good chance of living well past retirement — and spending many years collecting the larger benefit that comes with waiting. The average American who reaches age 65 can expect to live nearly 20 more years, according to the National Center for Health Statistics.

4. I can’t work anymore

“The biggest reason why [people] claim at 62 is they aren’t really healthy enough to continue to work,” says Matthew Rutledge, a research fellow at the Center for Retirement at Boston College. “If you are working as a roofer for 25 years and your balance is not great, that might be part of the reason you can’t do the job.”

The pandemic also pushed millions of older workers into early retirement, sometimes voluntarily and sometimes not, speeding up their timetable for considering Social Security.

The counterargument: This doesn’t apply to everyone, but for some older adults, finding a new line of work you are physically capable of pursuing can help you put off claiming Social Security. Labor shortages in the wake of the pandemic have provided new opportunities for experienced workers.

5. Heard it from a friend

Fear of missing out, or FOMO, can be a powerful thing, and if you keep hearing your friends talk about their monthly Social Security payouts, you may want in, too. 

“There’s a lot of misinformation amongst family and friends about Social Security,” and rarely does the advice involve delaying, says Jody D’Agostini, a retirement planning specialist with Equitable Advisors.

Instead, people hear from friends and relations about how great it is to receive a monthly payment and how they don’t have to worry about Social Security not being there when they are ready to collect, she says. Often lost in these conversations is the fact that the longer you wait, the more you get.

The counterargument: What’s right for your friends might not be right for you. When deciding when to collect your own benefit, consider your own health, finances and family situation, not those of others, however well-meaning.

Better to speak to an expert, like a trusted financial adviser or retirement planner. You can also find answers to common claiming questions in AARP’s Social Security Resource Center.

6. It’s my money and I want it now

This one is common among working adults, Artache says. That’s not surprising, given the decades they have spent paying a chunk of their earnings into Social Security. Whether there are cash-flow issues or not, some people simply want to access their benefit as soon as it becomes available.

The counterargument: Getting yours might feel like the right thing right now, but you might regret it in 10 years if, for example, you suffer a health setback and find you need more income than you’re getting to cover medical or living costs.

“People are saying ‘give me money’ without thinking long term,” Artache says. He suggests drawing down a 401(k) or other retirement account first and saving Social Security for later. If that’s not an option, try to curb expenses to free up cash — by spending less on discretionary items, for example, or downsizing your home.

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