Social Security: Considering Taking Benefits Early? 6 Counterpoints to the Most Common Reasons

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The longer you wait to claim Social Security benefits, the bigger your payments will be; however, most Americans choose to collect before age 70. In fact, only 11% plan to delay benefits until age 70, and nearly 30% begin receiving Social Security at 62, the minimum claiming age, AARP reported, citing the Schroders annual U.S. Retirement Survey and a July 2022 Congressional Research Service report.

When people claim benefits early, it’s by no means an accident. According to AARP, these are the six most common reasons for claiming Social Security benefits early, and a counterpoint for each.

1. Social Security Will Run Out of Money

Nearly a third of survey respondents were concerned that the program would run out of money, says AARP, but this isn’t how the Social Security program works. Social Security is a pay-as-you-go program, meaning that as long as workers and employers pay payroll taxes, Social Security will not run out.

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However, Social Security pays more in benefits than it collects in revenue. The program may have reduced benefits in the near future unless Congress takes action. 

2. Inflation

Inflation is at a 40-year high, significantly reducing the purchasing power of consumers. As previously reported by GOBankingRates, the majority of respondents (85%) to a Motley Fool survey say inflation is stretching their budgets, and nearly three-quarters say they rely heavily on Social Security benefits to pay their bills.

Many Americans have started receiving Social Security benefits early to help counter the effects of inflation, but this may not be the best solution. There may be other steps you can take to help deal with rising prices, says AARP, such as cutting back on spending or tapping into other income sources. 

3. I Won’t Live Long Enough

Another reason people choose to claim benefits early is that they worry they won’t live long enough to enjoy the extra income. Those who claim early for this reason typically suffer from a chronic illness or have a family history of disease, AARP noted.

While your family history and health should be a deciding factor, AARP also noted that the average American who reaches age 65 can expect to live nearly 20 additional years.

4. I Can’t Work

If you can’t work anymore, the logical next step would be to claim your Social Security benefits. While this may be the only option for some, this isn’t true for everyone. If you are physically unable to continue working at your current job, finding less physically demanding work could help you delay claiming benefits.

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5. My Friends Receive Benefits

Your friends and some family members may be claiming their benefits early, but it doesn’t mean you should. When deciding whether or not to claim benefits early, AARP advises that you consider your own health, finances and family situation — and not rely on information your family and friends provide, because it may be inaccurate.

6. I Want it Now

You spent all of your working years paying into the system and now it’s your turn to reap the benefits. However, you could potentially reduce your benefits by as much as 30% by claiming early.

Benefits are reduced 5/9 of one percent for each month before normal retirement age, up to 36 months, according to the Social Security Administration. Beyond 36 months, benefits are further reduced 5/12 of one percent per month. It may be nice to get that extra income, but if you wait until age 70, your benefit amount will be much higher.

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