TIL CreativesRetirees rush to claim Social Security early as 2034 cuts loom, fears of a 23 percent benefit drop spark nationwide shift in strategy
A growing number of Americans are rethinking the long-held advice to delay claiming Social Security retirement benefits until age 70. With projected cuts to the program looming, market uncertainties, and evolving personal priorities, more people are opting to file as early as age 62, despite the financial trade-offs.The latest report from the nonpartisan Committee for a Responsible Federal Budget warns that without Congressional action, benefits could be reduced by 19 percent to 23 percent as early as 2034. That鈥檚 when the program鈥檚 trust fund, which currently holds about $2.7 trillion in assets, is expected to run out of reserves.”If these projections hold, retirees will face across-the-board payment cuts,” said Maya MacGuineas, president of the Committee. 鈥淚t’s no longer a theoretical debate, the window for reform is rapidly closing.鈥漇ocial Security鈥檚 design offers higher monthly payments the longer recipients wait to claim, up to a 25 percent increase by age 70 compared to benefits at full retirement age (between 66 and 67, depending on birth year). But those who start at 62 face a permanent reduction of around 30 percent.Still, there are compelling reasons to claim earlier:Live EventsSome retirees can invest benefits elsewhere, potentially earning better returns than the program itself, which historically yields about 2.5 percent鈥6 percent annually.Working while receiving early benefits reduces payments temporarily, but the Social Security Administration adjusts future payments upward to compensate, though this process can be complex, especially for self-employed individuals.And for many, health concerns or shorter life expectancy mean it simply doesn鈥檛 make sense to wait.Critics argue that claiming early can lock retirees into lower lifetime income, especially if they live longer than expected. But in an era of fiscal uncertainty, others view it as a practical hedge.Financial planner Olivia Greene says the trend reflects a deeper shift: 鈥淧eople want flexibility. They鈥檙e not just doing math, they鈥檙e making life choices. And Social Security, once seen as a steady promise, now comes with real risks.鈥滾awmakers on both sides of the aisle acknowledge the urgency, but no consensus has emerged on how to restore solvency, whether through tax hikes, benefit formula changes, or raising the full retirement age again.(You can now subscribe to our Economic Times WhatsApp channel)
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(You can now subscribe to our Economic Times WhatsApp channel)Read More News onSocial Security retirement benefitsclaiming Social Security earlyretirement planningSocial Security cuts projectionsretirement age 62financial impact of Social Securityretirement income strategieslife expectancy and retirementsocial securityRetirement(Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates….moreless
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