Scary Financial Mistakes: Taking Social Security Early

Oct 23, 2019

By Theresa Fry, Senior Vice President and Manager, IRAs, Retirement and Education Planning

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One of the biggest fears most people have about retirement is running out of money.  Retirement decisions can be scary because your financial well-being depends on you making the right decisions for you and your family.  Deciding when to take Social Security is one of those important retirement decisions that once made, generally cannot be un-made.  That by itself is scary enough.  But taking Social Security early is often a regrettable, scary, financial mistake.

The Social Security Administration reports that roughly half of Social Security recipients began collecting benefits at the earliest possible age of 62 and nearly three-quarters of recipients are receiving reduced benefits because they elected to take Social Security before full retirement age.[1]

Consider this example of a husband and wife, both age 62 and retired.  Husband has a full retirement age primary insurance amount (PIA) of $2,050 a month.  Wife has a PIA of $1,300 a month.  If they begin collecting Social Security at age 62, they both would receive reduced benefits.  The husband’s first year benefit would be reduced to $1,529 a month ($18,348 a year) and the wife’s to $958.75 a month ($11,505 a year).  If the husband lives to age 90 and the wife to age 93, their lifetime benefit from Social Security would be $920,765 assuming an annual 2% cost of living adjustment.

If instead, they wait a few years and collect their Social Security at their full retirement age of 66 and 6 months, their lifetime benefit increases to $1,078,800.  That’s a difference of $158,035.  If they wait to collect until age 70, where they can take advantage of delayed retirement credits, their combined lifetime benefit increases to $1,175,040. That’s a difference of $254,275 over their lifetimes.

If taking Social Security early comes at such a high cost, why do so many people do it? It may be because:

  • They don’t understand the benefits of waiting.
  • They don’t know how to properly utilize other retirement income options to help them wait until full retirement age or later to begin Social Security.
  • They start Social Security simply because they stopped working.
  • They are concerned about the uncertainty surrounding Social Security.
  • Social Security is their primary source of retirement income and they need it as soon as possible.
  • They have health or longevity issues in the family.

The reality is, most people don’t develop a strategy for collecting Social Security.  If you are nearing retirement age and you have not discussed Social Security with your financial advisor, what are you waiting for?  We have tools designed to show you how to maximize your Social Security benefits and will compare a variety of claiming strategies to help you decide which one will work best for you.  Don’t let the fear of making a mistake keep you up at night.  Contact your Benjamin F. Edwards financial advisor today and ask for your Social Security evaluation.

[1] Source:, Annual Statistical Supplement, 2017