As concern grows about the long-term solvency of Social Security trust funds, a growing number of Americans are rushing to claim their benefits early, lest the program dry up.
However, personal finance expert Suze Orman warns that following this viral advice will lock retirees into a permanent and irreversible financial penalty.
“There have been discussions on social media recently about Social Security that I consider to be bad advice,” Orman wrote earlier this month on his website. “The message is that it’s better to apply as early as possible, at age 62, rather than wait to collect a larger benefit by starting your checks later. That’s just not good advice.”
About two weeks ago, the Social Security Administration released its 2026 Trustees’ Report, which confirms that the federal retirement safety net is less than seven years away from depleting reserves, as the Old-Age and Survivors’ Insurance (OASI) Trust Fund is expected to exhaust its accumulated reserves in the fourth quarter of 2032.
SOCIAL SECURITY HAS LESS THAN 10 YEARS UNTIL RESERVES ARE EXHAUSTED, NEW REPORT FROM ADMINISTRATORS WARNS
Once reserves are exhausted, current tax revenues will cover only 78% of projected retirement benefits, according to the report.
People wait outside a Social Security office in Citrus Heights, California, July 12, 2023. (Getty Images)
According to SSA data, filing for retirement benefits at age 62 remains popular among retirees, although filing early permanently locks in lower monthly benefits.
“For anyone born in 1960 or later, the full retirement age is 67. That’s when you’re entitled to 100 percent of your earned Social Security benefits. If you choose to start collecting at age 62, you only receive 70 percent of that benefit, a 30 percent reduction that’s permanently locked in. Claiming early is essentially accepting a 30 percent penalty,” Orman said.
“A healthy woman who reaches age 65 has a life expectancy of 88 years. That means a 50 percent chance of still being alive at age 88 – still here, still paying her bills, still needing an income. If she hits her break-even point of 79, there’s a good chance she still has at least a decade or more ahead of her,” Orman said. “Every month after that break-even point, the person who waited collects a lot more.”
The personal finance expert also pushed back against claims circulating online that filing early guarantees your benefits. before trust funds run out.
“Current projections suggest that if Congress does nothing, Social Security would pay about 80 percent of scheduled benefits, a 20 percent cut. That’s a worst-case scenario. And as I’ve discussed before, Social Security has overcome funding problems before; in the early 1980s, Washington found solutions that didn’t require recipients to absorb the entire cost,” she said.
“If your benefit at age 67 was $2,000, claim at age 62 a monthly payment of $1,400… Now apply the worst-case 20% reduction to both. The person who waited until age 67 could see their benefit reduced from $2,000 to $1,600. The first claimant gets about $1,260.”
Orman said there are two exceptions to applying for Social Security in advance: health problems and inability to work or draw. of retirement savings.
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And the “strongest movement,” according to Orman, is to wait until age 70 to qualify for Social Security benefits.
“If you’re married, ask whoever earns the most to wait as long as possible, ideally until age 70. The surviving spouse receives the larger of the two benefits. Making that number as large as possible is one of the most important financial gifts you can leave your partner,” Orman said.
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