Thanks to seemingly never-ending announcements regarding Social Security policies, seniors who are close to retiring may be curious about how things could change when it comes time to collect benefits. All of the certainty surrounding the program is also leading many to think about applying sooner rather than later. If you’re approaching age eligibility, you may be wondering if it’s a good idea for you to follow suit. Keep reading to learn more about why experts say retirees are filing for social security earlier, if there’s cause for concern and what steps you may want to take.
Why are so many retirees filing for Social Security earlier?
With so many recent changes happening both within the Social Security Administration (SSA) and the actual program, many future retirees are nervous to wait too long to file for benefits. One of the main reasons: a worry that money will run out for eligible seniors.
“Prospectively, according to the 2025 annual report of the Social Security Board of Trustees, the surplus in the trust funds that disburse retirement, disability and other Social Security benefits will be depleted by 2034,” says Ronald Waldman, Social Security and personal finance expert for JustAnswer.com. “That’s one year earlier than the trustees projected in their 2024 report. This is cause for concern for future retirees as the shortfall will eventually have to be addressed, likely by either increasing Social Security taxes, reducing benefits and/or raising the full retirement age.”
The retirement age has already been pushed back in the past, so naturally there’s reason to believe officials will do so again. Low funds would make this even more likely as changing the retirement age would decrease the amount of time seniors are being paid full benefits.
This year, the full retirement age (FRA) was increased for anyone whose birthday falls after a specific year. Now, Americans who were born in 1960 or later have a full retirement age of 67. But experts say that it’s very possible that delaying Social Security could happen again and future payees may need to wait until age 70 to collect.
How budget cuts may affect seniors
Many federal departments have been impacted by budget cuts already this year and the SSA is no exception. Luckily, there hasn’t been an indication that the financial shift will affect funds for beneficiaries.
“Budget cuts will not have as much of an impact on Social Security,” assures JustAnswer finance expert Jeffrey Stouffer, CFP. “FICA taxes on wages and salaries provide the funding that the retirees receive. Based on this, my concerns are more on the working population growth and tax payments made available in future years.”
However, the cuts can lead to other negative consequences like staff reductions and policy changes (like closing SSA offices) that could directly impact seniors, adds Waldman. If there aren’t as many employees working for the administration, it may be more difficult for customers to get in touch with someone for issues not covered by the website. There could also be increased processing times for benefits, something that was already seen in June when employees were told to focus on cases linked to the Social Security Fairness Act.
Is retiring early for Social Security a good idea?
Social Security is meant to replace a percentage of a worker’s income. Most Americans begin receiving payments after they retire. Though the FRA is 67 for many seniors now, it is possible to start collecting benefits at age 62.
However, experts say it’s not necessarily wise to apply that early—especially if it’s only due to concerns about benefit funds running out.
“Retiring before full retirement age will reduce the potential benefits significantly, now and in the future,” says Stouffer. “The fear of not receiving any benefits is clearly understood. In order to reduce the impact of reliance on this program, start other strategies that can contribute to lifelong income.”
What to consider before filing for benefits
Social Security early retirement means that your benefits will be reduced by a small percentage each month before you reach your full retirement age. Still, there are some cases where it may make sense to do so.
“When to retire is a very personal decision that will vary from person to person,” says Waldman.
Here are some factors that can help you consider if it’s a good option for you.
- Your health and life expectancy.
- Other income sources (like pensions, IRAs, bonds and stock investments).
- Desired lifestyle and family income needs in retirement years.
- If you will still be working after you apply.
You may find that any of these factors influence your decision. For example, if you’re in good health and have other sources of money, you’ll have some flexibility in waiting to apply. Someone with a different lifestyle or financial situation might not want to wait until they hit the FRA.
Other ways to feel secure in retirement
With the future of Social Security a bit uncertain, you may be wondering what other steps you can take to ensure you are financially secure in retirement. One helpful option is to form plans to get other income streams.
“Long term, investing in the stock market (for example, major index funds like the S&P 500) can provide long-term returns that significantly exceed inflation rates,” shares Waldman. “Investing 15 percent of your annual salary is often suggested as a good long-term retirement planning goal.”
But even if you haven’t been able to set much money aside via a Roth IRA, 401K or your own savings account, there’s still time to do so later in life.
“Even with less than 10 years before retirement, it is possible to build somewhat of a nest egg with the time available,” assures Stouffer.
Finally, taking care of yourself can make a huge difference, too. If you maintain good health after retiring, you won’t need to spend as much on medical expenses. This means more money in your pocket for a comfortable lifestyle in your retirement.
