The Financial Implications You Need to Understand

Why People Are Filing Early

So why the rush to claim benefits early despite those steep trade-offs? Retirement experts point to several contributing factors.

• An aging population means a record number of people are now becoming eligible to claim Social Security.
• High living costs and inflation are draining emergency savings faster than many planned.
• Fear about Social Security’s future. Social Security is facing a financing shortfall that threatens to reduce benefits in the near future if Congress does not act.

Those financial worries explain part of it, but behavioral research shows that psychology is just as powerful:

• Psychological ownership. After decades of paying FICA taxes, many workers feel they’ve earned the benefit and crave the satisfaction of finally collecting it.
• Loss aversion. People who are especially sensitive to losses are more likely to claim early, even when shown that waiting would leave them ahead. Seeing the larger lifetime-benefit totals they would receive if they waited until 70 actually backfired, as it heightened their fear of loss and prompted people to say they would claim their benefits earlier.
• Physical burnout and health worries. Many workers simply cannot keep doing their jobs well until age 67, let alone 70.

What to Ask Yourself Before Filing Early

What’s my break-even age? Use the Social Security calculator or a spreadsheet to do it yourself: Compare the cumulative payout from filing early, at full retirement age, and at 70. If you expect to live beyond 78 to 80, delaying usually wins.

Will I keep working? If yes, run the earnings-test calculator. Withheld benefits are later added back, but the timing gap pinches cash flows.

How healthy am I—and how healthy is my spouse? Your benefit level becomes the survivor benefit if you’re the higher earner. Delaying can be an act of financial protection.

Do I have other income buckets? Tapping 401(k) or IRA savings first may let your Social Security benefits grow. Required minimum distributions now begin at 75 for many, giving extra room to maneuver.

When Claiming Early Can Make Sense

• It offers cash-flow relief if you’ve lost a job or your emergency savings are thin.
• Health issues or a shorter life expectancy might tilt the break-even calculus toward claiming earlier. And, if you live longer, you’ll have more years to collect.
• It could be a spousal-strategy filler. It can be strategic to have the lower-earning spouse file early, while the higher earner delays filing to boost the household’s survivor benefit.
• Better returns elsewhere. While never guaranteed, if you think you can invest your Social Security income in higher-yielding assets, it may be worthwhile.

The Bottom Line

Claiming Social Security at 62 can be a lifeline, a strategy, or a costly mistake. Weigh your projected longevity, job plans, taxes, and household needs against the steep lifetime reduction. Use Social Security calculators, speak with a financial planner, and run a break-even analysis. Then file with confidence, not anxiety-driven haste. Your future self will likely thank you.