COVID-19 has profoundly affected the lives of millions of Americans. And it will continue to do so long into the future. In addition to the devastating loss of life, many people will also face far-reaching financial consequences. 

One of those consequences may be lower Social Security benefits for life. Here's why. 

Older couple reviewing financial paperwork with advisor.

Image source: Getty Images.

The virus may prompt Americans to claim Social Security earlier than planned

According to research by Nationwide Financial, an estimated 14% of all adults have indicated they plan to claim Social Security retirement benefits earlier than they originally expected as a result of COVID-19.

This may seem like the right course of action for a number of reasons, with some people planning to claim benefits ahead of schedule to enable early retirement because they fear contracting the virus at work. Others may be starting benefits early because they've found themselves without a job and are unable to find work in the 2020 recession. Still others may have seen their investment account balance take a hit when the market crashed in March, and may not have fully recovered their losses, even during the rally that followed in the subsequent months.

But while there are lots of valid reasons to be tempted to file for benefits ahead of schedule due to COVID-19, doing so can doom you to less income over your lifetime. That's because claiming ahead of full retirement age means early filing penalties apply for each month you're early. And claiming any time between full retirement age and 70 means forgoing delayed retirement credits that otherwise raise the size of your checks.

Early claiming could also increase the possibility you'll file for benefits without working for a full 35 years, which lowers the amount of your checks further. The Social Security Administration bases benefits on average wages over that time period and includes zeros if you haven't worked that long. 

For those who opt to take their benefits earlier than planned, there are no do-overs unless you're able to withdraw your claim within 12 months of making it and pay back all that you've received. And, contrary to popular belief, if you claim benefits early and settle for a smaller check, your benefit amount is not recalculated at full retirement age. The effects of the early filing penalties never disappear, and all future benefit increases are based on the smaller benefit you started with. 

That means if you later regret the fact that you started to get your checks early during these troubled times, you'll have few or no options available to fix the problem

Make the right choice about when you claim your Social Security benefits

If you're facing serious financial struggles and need to claim Social Security early to avoid being forced to work at a job where you no longer feel safe, claiming benefits ahead of schedule may be worth it to you, even if your actions mean your checks will be smaller.

But before you make a decision that will reduce your benefits for life, be sure to look into other options. If you've lost your job, for example, claiming unemployment for as long as possible while looking for work can be a better course of action. Even if you can't find a traditional job offering workplace benefits, recent research has shown non-traditional work can improve retirement readiness for many Americans. 

Of course, not everyone will have the option to find an alternative and avoid an early benefits claim driven by COVID-19. But before you pull the trigger and resign yourself to a smaller Social Security check, make sure you understand the consequences of your choice.