Fears about Social Security are pushing some Americans toward a costly decision: claiming early and locking in a smaller monthly check for life.
A Schroders survey found 45% plan to claim before reaching full retirement age at 67. Many worry the program will run out of money, but trust fund depletion would not bring Social Security payments to an end.
Payroll taxes would keep flowing after the retirement fund runs short, allowing the program to cover most scheduled benefits. The reduction from claiming early, however, would already be locked in.
One cut is already certain
Social Security’s retirement trust fund is projected to run out in the fourth quarter of 2032. Without action from Congress, continuing revenue would cover 78% of scheduled payments, leaving eligible retired workers, spouses, children, and survivors facing a 22% cut.
That outcome assumes lawmakers make no changes before 2032. Claiming at 62 creates a separate reduction that takes effect immediately.
For people born in 1960 or later, filing at 62 produces a monthly benefit 30% smaller than the amount available at their full retirement age of 67. Waiting until 70 raises the monthly payment to 124% of the full-retirement-age benefit.
Ray R. Harris of Social Security Claiming Experts told Barron’s that the possible trust fund reduction remains uncertain, while the 30% reduction for claiming at 62 is guaranteed.
Waiting will not suit everyone. Someone who needs Social Security to cover current expenses may have little room to delay, while poor health or a shorter life expectancy can make an earlier claim reasonable.
The costly mistake is filing early only because of fears that Social Security will disappear. That can leave a retiree accepting a larger reduction years before Congress has settled on any reform.
The biggest check takes time
A worker retiring in 2026 can receive a maximum benefit of $2,969 per month at age 62. The maximum rises to $4,152 at full retirement age and $5,181 at age 70.
Those figures apply only to workers who earned at least Social Security’s taxable wage ceiling for 35 years. Experts cited by SILive.com estimated that around 1% of recipients collect the maximum.
Social Security uses a worker’s 35 highest-earning years to calculate the benefit, adjusting earlier wages before applying its formula. Years without earnings can pull the amount lower when a worker has fewer than 35 years on record.
Claiming age then determines the share paid each month. Benefits can begin at 62, while full retirement age is 67 for people born in 1960 or later. Waiting beyond 67 adds delayed retirement credits of 8% a year until 70.
The 2027 cost-of-living adjustment will be announced on Oct. 14. The Senior Citizens League forecasts a 3.5% increase, which would lift its average-benefit figure by $67.90, from $1,940.08 to $2,007.98.
That estimate could change before the official announcement, and the increase for each recipient would depend on the size of the current benefit.
Congress still has several options
The deadline is becoming an election issue because senators chosen in 2026 could still be serving when the retirement trust fund is projected to run out.
A Peterson Foundation survey found 81% of battleground-state voters were more likely to back a candidate with a plan to prevent automatic cuts. Support for taking action rose to 91% from 49% after respondents learned about the projected 2032 shortfall.
The most popular option was an additional 1% payroll tax on income above $184.5K, which received 72% support. Another 66% backed limiting annual benefits so no retired couple would receive more than $100K, while only 29% supported borrowing to prevent the cuts.
Former Treasury Secretary Jack Lew told CNBC that Social Security sends monthly benefits to more than 75M Americans. He said the retirement trust fund could run out in late 2032, leaving 78% of scheduled benefits payable.
Combining the retirement and disability funds would extend full payments into the third quarter of 2034, after which 83% would remain payable. Congress would have to authorize that combination.
Ted Jenkin of Exit Stage Left Advisors proposed lifting the taxable wage ceiling from $184.5K to $400K, gradually raising the payroll tax rate to 7.2% from 6.2%, and moving full retirement age to 70 for people born after 1990.
None of those ideas has become law. For someone deciding when to claim, the future shape of Social Security remains uncertain, but the reduction from filing early does not.
