The Most Expensive Social Security Mistake People Keep Making

A lot of people claim Social Security the moment they turn 62. It feels like the safe move. You finally hit the starting line, the checks are there, and it's hard to turn down guaranteed money.

But claiming early is one of the costliest decisions retirees make. It cuts your monthly benefit for life, shrinks every future cost-of-living increase, and limits how much you can earn if you keep working. Most people don't realize how expensive that choice becomes over a 20- or 30-year retirement.

Claiming early locks in a permanent pay cut

Social Security lets you claim as early as 62, but your full benefit doesn't kick in until your full retirement age. Claiming early reduces your check by up to 30%. That reduction never goes away.

Retirement usually lasts longer than people expect. When you spread that smaller check across decades, the lifetime cost adds up to tens of thousands of dollars.

You lose out on an extra 8% per year

If you wait past your full retirement age, your benefit grows roughly 8% per year until 70. There's no market volatility, no risk, no fine print. It's one of the strongest returns you can earn anywhere in personal finance.

That growth compounds. Someone who waits until 70 ends up with a monthly check that's up to 77% higher than someone who claims at 62.

Early claims trigger the earnings test

A lot of early claimers plan to keep working. That's where the earnings test catches people off guard.

If you claim before full retirement age and earn above the annual limit, Social Security withholds part of your benefit. The money isn't gone forever, but the withholding surprises people and throws off their cash flow.

Waiting avoids the earnings test entirely. And if all of this seems complicated, you're not alone. A short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

COLAs grow from a smaller base

Annual cost-of-living adjustments apply to whatever benefit you locked in. If you started with a smaller check at 62, every future COLA is smaller too.

The gap between early claimers and late claimers widens over time. What begins as a 30% haircut turns into an even larger lifetime difference once you layer in decades of inflation.

It's hard to undo

You only have two ways to reverse an early claim. You can withdraw your application within the first 12 months and repay everything you've received. Or you can suspend your benefit at full retirement age and restart at a higher number.

Both options help, but neither fully eliminates the long-term cost of claiming early.

The real risk isn't waiting

People often worry that waiting means "losing" benefits. But most retirees are facing a different risk: living a long life with a permanently smaller paycheck.

Social Security is designed to last as long as you do. A larger check gives you more flexibility, more stability, and more room to handle rising costs in your 70s, 80s, and 90s.

If you're on the fence about when to claim, it's worth running the numbers with a professional who can map out different timelines. You can start with a free retirement matching tool that helps you find a local fiduciary. Or our partner SmartAsset's secure quiz matches you with up to three fiduciary financial advisors who have passed a rigorous vetting process.

Waiting isn't always the right move. But claiming too early is the most expensive mistake people make, and it's one of the easiest to avoid with a little planning.