Here’s the big reason every US senior is claiming Social Security early (or at least seems to be) — but should you?
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Somewhere along your retirement-planning journey, you’ve likely been told to wait as long as possible to start receiving Social Security retirement benefits. Why? Because the longer you wait, up until age 70, the higher your monthly benefit will be for the rest of your life.
On the surface, it seems like a slam-dunk choice.
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The size of your monthly Social Security benefit is determined by a formula based on your 35 highest-earning years. To get 100% of your benefit, you’ll have to wait until your full retirement age (FRA), based on your date of birth (that’s 67 for anyone born in 1960 or later).
If you choose to take Social Security earlier, your benefit will be reduced permanently for every month prior to your FRA: by 5/9 of one percent for each of the first 36 months and 5/12 of one percent for each month more than 36. So, if you collect at age 62 — the earliest you can collect — your benefit will be reduced by 30%.
On the other hand, your benefits increase by 2/3 of one percent for every month you wait past your FRA. This amounts to an 8% increase for each year you wait and a 24% increase if you wait until age 70.
So, if you’re entitled to $2,000 per month at your FRA, then you’ll receive $1,400 at 62 and $2,480 at 70.
Why retirees are claiming Social Security early
Despite this, 62 was still the most common age (1) to collect Social Security in 2023, according to data from the Center for Retirement Research. And the average claiming age was 65 — still short of the average FRA.
It doesn’t look like this will change substantially in the near future. Although about seven in 10 (69%) non-retired Americans know that waiting will result in higher benefits, 45% plan to claim before 67 (2) and only one in 10 plan to wait until 70, according to the Schroders 2026 US Retirement Survey.
The main reason? Almost half (45%) say they need the income now.
This isn’t surprising, given that Americans believe they’ll need a ‘magic number’ of $1.46 million to retire comfortably, according to Northwestern Mutual (3).
Federal Reserve data from 2022 shows that people 55-64 had a median of $185,000 in retirement accounts (4) and just $67,700 in other financial assets (5). Even with the increase in real estate values over the past four years, home equity still falls short (6) of what Americans think they’ll need for retirement.
But taking Social Security early points to another issue many retirees face: the lack of an income plan for retirement. About half (51%) of retirees surveyed by Schroders don’t have a strategy for generating retirement income and more than half (58%) don’t know how long their savings will last.
“Our survey findings reveal a blind spot that many don’t discover until it’s too late,” Deb Boyden, head of US defined contribution with Schroders, said in a release (2). “Planning for retirement isn’t just about how much you save — it’s about knowing how you’ll turn that savings into a reliable income stream.”
Without a strategy for making that money last, Boyden warned “that uncertainty can be just as stressful as not having saved enough in the first place.”
And one of the best ways to fight an uncertain future is by developing a robust plan now.
A plan can be your lifeline
If retirement is sneaking up on you, but you haven’t yet reached your savings goals — or don’t have a retirement income strategy other than claiming Social Security early — then you might benefit from speaking with a qualified financial advisor.
If you have a portfolio of at least $250,000, a platform like WiserAdvisor can connect you with vetted professionals who can help you manage withdrawals, minimize tax exposure and ensure long-term sustainability.
After answering a few questions about your savings, retirement timeline and overall investment portfolio, WiserAdvisor reviews its network to match you for free with up to three vetted, reputable advisors aligned with your needs.
You can then schedule no-obligation consultations with your matches to determine who’s the best fit for your long-term goals.
Notes: WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
Your home could bail you out
For homeowners, you could potentially add to your retirement income — and delay Social Security — by drawing on your home’s value.
One way to tap into liquidity is through a Home Equity Line of Credit, or HELOC. As a revolving line of credit, a HELOC leverages the equity in your home as collateral, so you can borrow and repay funds as needed — similar to a credit card.
For example, AmeriSave offers a HELOC that lets homeowners borrow against their equity as needed during a draw period. You draw funds only when you need them, making a HELOC useful for renovations or debt consolidation (versus a large lump-sum loan).
Interest is charged only on what you use and the balance is repaid over time. It’s essentially a flexible credit line secured by your home, delivered through a mostly online application process.
Aside from tapping into your home’s equity, you could also consider bringing in passive income by renting out a basement suite, getting a roommate or offering short-term rentals. You could even rent out a storage space or parking spot.
Stretch your dollars further
Even with a strategy and new sources of income, the mounting inflation over the past five years has made it harder for many Americans to make ends meet — and it means you may need to stretch your retirement income dollars further.
To help with this, you might want to consider joining a senior-focused organization like AARP, which offers discounts on everything from prescriptions and dental plans to travel, entertainment and insurance.
AARP not only offers money-saving perks, but as a member, you get access to guides that can help you make the most of Social Security, choose the right Medicare plan and uncover other government benefits, potentially saving you thousands.
Sign up with AARP today and get 25% off your first year.
Protect your wealth from inflation
If you’re worried about persistent inflation, you could also consider alternative assets that have historically acted as inflation hedges over the long term — meaning they could potentially help you preserve purchasing power.
One such asset is gold — and, since it’s historically behaved differently than stocks and bonds, it can add diversification to your portfolio. The reasoning behind this is simple. Unlike fiat currencies, like the U.S. dollar, gold can’t be printed at will by central banks to fight inflation. It also tends to be a better store of value during a financial crisis.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold. This can make it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
Needing a regular stream of income is a valid reason to take your Social Security early. But it can permanently reduce your cash flow, so it could be worth consulting a qualified financial advisor to explore alternative options.
But, if you do need to take Social Security early, you may need to look for ways to protect your nest egg from inflation and to stretch your dollars further.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Center for Retirement Research at Boston College (1); Schroders (2); Northwestern Mutual (3); U.S. Federal Reserve (4), (5), (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.