Baby Boomers are making a big mistake when it comes to Social Security. Unfortunately, it is a mistake that could cost them for the rest of their lives, and it is an error that’s very difficult and often impossible to undo.
Here’s the Social Security choice that far too many Boomers are making that could end up coming back to haunt them.
Baby Boomers are making a bad Social Security choice
Baby Boomers are between the ages of 60 and 79, which is the age when they have a critical choice to make about their Social Security.
That choice is exactly when to claim their benefits — and far too many Boomers are making a decision that could cost them a ton of money. Specifically, data from Bankrate shows that close to a quarter of all retirees claim their Social Security benefit at 62, making it the second most popular age to claim benefits.
Other popular claiming ages include:
- 65 (11.3% claim at this age)
- 66 (34.1% claim at this age)
By contrast, only 9.1% of retirees claim Social Security between the ages of 70 and 75. And, this is unfortunate, given that the age of 70 is the best age for the majority of retirees to claim their benefits.
While you become eligible to start checks at 62, an early claim before your full retirement age will result in a reduction in your standard benefit. Furthermore, any claim before age 70 will result in retirees collecting less than the maximum income available to them since Social Security benefits keep increasing until age 70.
To put this in perspective, the maximum possible monthly benefit cap for an early claim at age 62 is $2,969, compared to $4,152 at Full Retirement Age (FRA), and $5,181 if you delay until age 70. This creates a massive $2,212 monthly difference between filing at the earliest versus the latest possible age.
Boomers aren’t just reducing their monthly income with this claiming choice, either. The National Bureau of Economic Research found that more than 90% of younger Americans are better off waiting until 70 to claim benefits because this gives them the best odds of maximizing lifetime income.
By claiming earlier at a suboptimal age, retirees are leaving an estimated $182,370 on the table. This data likely holds true for Boomers as well, as Boomers are also enjoying longer life expectancies than workers did at the time when Social Security’s system of early filing penalties and delayed retirement credits was created.
The baseline figures underscore this reality. The 2.8% Cost-of-Living Adjustment (COLA) raised the average retired worker’s benefit to $2,071, but this bump was simultaneously offset by a steep 9.7% jump in Medicare Part B premiums to $202.90 per month. Because Medicare premiums are usually deducted directly from Social Security checks, starting with a permanently lower baseline benefit at age 62 means rising healthcare costs will consume an even larger percentage of your net monthly income.
Boomers who claim benefits early often can’t undo their choice
Unfortunately, once a Boomer claims their Social Security and starts their checks early, this is often a permanent choice.
Now, technically, there is a process for undoing an early Social Security claim. If you start benefits early, you can rescind your claim within the first 12 months of making it. The catch is that you have to pay back every single dollar of benefits that you collected. This is impossible for many, so rescinding benefits isn’t really a viable solution for those who make the mistake of an early claim.
The “Working Retirement” Earnings Trap
A significant portion of Boomers claim early at 62 while continuing to work, consult, or run a small business, completely unaware of the Retirement Earnings Test (RET). If an early claimer earns more than $24,480, the Social Security Administration (SSA) will claw back $1 in benefits for every $2 earned over that threshold. For those reaching their full retirement age, the limit increases to $65,160, with a clawback of $1 for every $3 earned over the limit.
The 12-month limit for rescinding benefits is also a problem, as Boomers who end up regretting their early Social Security claim may not realize until later in life that they should have made a different choice. Their decision to shrink benefits is likely to catch up with them at the tail end of their retirement when their savings is dwindling, or when one spouse dies, and the surviving spouse realizes that their partner’s early claim ended up shrinking survivor benefits.
This intertwined spousal and survivor benefit mistake is critical for married couples. A surviving spouse is entitled to 100% of the deceased worker’s monthly benefit. If the higher-earning spouse files at 62 out of convenience, they aren’t just lowering their own check—they are permanently capping the maximum safety net available to their partner later in life, shifting the decision from an individual choice to a comprehensive family legacy strategy.
For Boomers who don’t want to be left with regrets, it’s important to carefully consider the optimum claiming age before starting your benefit check.
Given the importance of this decision, those who are thinking about retiring should seriously consider talking with a financial advisor first to find a strategy that makes sense for their situation. With professional advice, Boomers can consider all the long-term implications of their Social Security claim so they make the decision that’s best for their financial security throughout the entirety of their later years.
Editor’s Note: This article has been updated to include the maximum monthly Social Security benefit caps for age 62, Full Retirement Age, and age 70. It incorporates the average retired worker benefit following the latest Cost-of-Living Adjustment alongside current Medicare Part B premium deductions. Additionally, new subsections have been added to detail the Retirement Earnings Test thresholds and clawback penalties for early claimers who continue to work, as well as an expanded analysis of how early filing permanently limits maximum survivor benefits for a surviving spouse.
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