The age at which you begin taking Social Security will directly affect your benefit amount -- sometimes by several hundred dollars per month. To receive the full benefit you're entitled to, based on your career history and earnings, you'll need to wait until your full retirement age (FRA) to file. This age will depend on your birth year, but it's 67 years old for anyone born in 1960 or later.
If you file before your FRA, you'll receive reduced payments each month. On the other hand, delaying benefits past that age will earn you your full benefit amount plus a bonus each month for the rest of your life.
Age 62 is the most popular time to claim Social Security, according to a 2020 report from the Bipartisan Policy Center, but filing that early will result in much smaller checks. Here's how much the average retiree misses out on each month by claiming before their FRA.
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Claiming early comes at a cost
The earliest age you can begin taking Social Security is 62, but filing even a month earlier than your FRA will result in smaller payments. If you have an FRA of 67 years old, claiming at 62 will permanently reduce your benefits by 30% per month.
As of 2022, the average Social Security benefit among retired workers without any reductions for claiming early was around $2,209 per month, according to the most recent data from the Social Security Administration. That same year, the average benefit with reductions for filing early was roughly $1,609 per month.
In other words, claiming early resulted in around $600 less per month for the average retired worker in 2022. In 2021, that difference was around $531 per month; in 2020, it was roughly $483 per month.
Should you avoid filing early?
Claiming benefits early can reduce your payments by several hundred dollars per month. If money is going to be tight in retirement, that could be a significant drawback.
Social Security has also been facing some financial problems that could affect your retirement. The program's trust funds have been running out of money and are expected to be depleted by around 2034. At that point, benefits could be slashed by around 20%. If you're already receiving smaller checks by filing early, these potential benefit cuts could sting even more.
In addition, benefits have been struggling to keep up with inflation over the past couple of decades. Despite annual cost-of-living adjustments (COLAs), Social Security has lost around 40% of its buying power since 2000, according to a 2022 report from The Senior Citizens League.
This isn't to say that claiming early is a bad idea. But between potential benefit cuts and the loss of buying power, Social Security may not go as far in the future. If you're planning to rely heavily on your benefits, claiming early could make retirement more difficult to afford.
When claiming early can be a smart move
Despite its drawbacks, filing early is sometimes the best decision -- primarily if you don't need the extra cash. If you have a robust retirement fund and won't be relying on Social Security as your main source of income, those smaller payments may not be a dealbreaker.
Claiming early can also be a smart decision if you're forced to retire early due to job loss or health issues. Technically, you can retire in your early 60s and still delay benefits. But that means you'll need to rely on other sources of income in between, and that risks draining your savings too quickly. Filing early, then, can make retirement more affordable while better protecting your nest egg.
Finally, if you believe you may not live well into your 80s or beyond, filing early could make sense. You'll still receive smaller checks each month but could collect more in total over a lifetime, compared to delaying benefits.
Social Security can go a long way in retirement, but claiming early could reduce your payments by hundreds of dollars per month. Before you make your decision about when to claim, be sure you've weighed the pros and cons of filing early to ensure you're making the best choice for your situation.
