The Great Acceleration: Why More Seniors Are Rushing to Claim Social Security Early

A growing number of Americans are making a pivotal financial decision much earlier than planned: claiming Social Security benefits before their full retirement age. This accelerating trend is largely fueled by deep-seated anxiety over the program's long-term solvency, compelling many to secure what they can now, even if it means significantly smaller monthly payouts for the rest of their lives.

The statistics paint a clear picture of this shift.

Historically, claiming Social Security at age 62 has been popular, but recent data reveals a stark increase. In 2023, nearly 30 percent of new Social Security retirees opted to claim their benefits at 62, a noticeable jump from 25.5 percent in 2018. This means close to a third of eligible seniors are choosing to receive a reduced benefit rather than waiting, driven by the looming specter of the Social Security trust funds potentially running dry.

This decision, while understandable from a 'bird in the hand' perspective, carries substantial long-term financial implications.

Claiming benefits at 62 typically results in a permanent reduction of up to 30 percent compared to what one would receive at their full retirement age, which currently ranges from 66 to 67 depending on birth year. For many, this translates to a monthly benefit hundreds of dollars less than their full potential—around $1,400 to $1,500 for early filers versus an average of $1,900 for those waiting until full retirement age.

Financial advisors are increasingly observing this trend among their clients.

"Many people believe Social Security will run out of money before they claim their benefits, so they file as soon as possible," notes Justin Carbonneau, a partner at Validea. This sentiment underscores a widespread lack of confidence in the program's future, despite assurances that Social Security will not disappear entirely, even if its trust funds are depleted.

The fear isn't that benefits will cease, but rather that they will be drastically cut if Congress fails to act.

The urgency stems from official projections. The latest Social Security Trustees' report warns that the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to be able to pay 100 percent of scheduled benefits until the mid-2030s, likely 2033 or 2035.

After that, if no legislative changes are made, the fund would only be able to pay about 80 percent of scheduled benefits. This impending shortfall is a significant driver behind the rush to claim, as individuals weigh a guaranteed, albeit reduced, income now against an uncertain, potentially further diminished, future benefit.

The dilemma presents a critical challenge for policymakers.

Potential solutions, though politically contentious, include raising the full retirement age, increasing the Social Security payroll tax rate, or adjusting the benefit formula. Until a definitive solution is reached, the anxieties surrounding Social Security's long-term stability will likely continue to push more seniors towards early claims, forcing a trade-off between immediate financial security and a substantially smaller retirement income for life.