Three Potential Consequences of an Early Social Security Claim


You have options when it comes to signing up for Social Security. You can apply for benefits as early as the age of 62. However, you will not be entitled to your full monthly benefit until you reach full retirement age (FRA), which is 66, 67, or 66 and a certain number of months.

If you file for Social Security before your FRA, you will face a reduction in benefits, the extent of which will depend on how early you file and your exact FRA. However, if you apply for benefits at the age of 62, you will face a 25% to 30% tax penalty for the rest of your life.


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While you may be aware that filing for Social Security early will result in a lower benefit, you may be unaware of the consequences that may occur if your retirement income suddenly decreases. Here are just a few of the consequences of filing for Social Security before FRA.


1. You may be unable to cover your medical expenses.

According to HealthView Services, the average healthy 65-year-old couple retiring in 2021 can expect to spend 68 percent of their Social Security benefits on healthcare costs alone. However, if you reduce your benefits, you may have to cut back on healthcare. And that’s not something you want to do later in life.

Unfortunately, many seniors today are forced to make difficult decisions such as foregoing specialist visits and skipping medication because they simply do not have the funds to do so. If you want to avoid a similar fate, you should wait until at least FRA to file for Social Security.


2. You may be forced to return to work.

Some retirees enjoy doing part-time work. If that isn’t part of your plan, you might consider deferring Social Security until FRA. If you file early, you may have to work in some capacity to make up for lost income.

Furthermore, while some seniors are able to find jobs that are both fulfilling and not overly demanding, this is not always the case. So, if the prospect of returning to a desk job or working in retail sounds unappealing, you may want to hold off on filing for Social Security.


3. You may become completely bored.

It can be difficult to transition from a full-time work schedule to no job at all. And it’s critical to find ways to keep yourself busy so you don’t become bored – and depressed – in retirement.

However, if you claim Social Security early, you will have even less money to spend on leisure activities. This means that instead of spending your newfound free time visiting museums, going to the theater, and dining out with friends, you may be forced to stay at home, eat leftovers, and entertain yourself with books and television.

To be clear, spending time at home relaxing is not a bad thing. However, you may not want to be stuck doing it for 10 hours or more every day.


Apply for benefits with caution.

You have the ability to obtain a higher or lower Social Security benefit. If you’re approaching retirement with little savings and know you’ll be relying on Social Security to cover many of your expenses, it’s a good idea to postpone filing until you reach FRA.


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You may even decide to postpone your filing past that point in order to increase your benefits. Each year you delay filing for Social Security after the FRA, your benefits increase by 8% until you reach the age of 70. That’s a nice way to increase your financial freedom in retirement.

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