Most financial advisors recommend that clients wait to claim Social Security retirement benefits until full retirement age or up to age 70. That is sound advice. But since the COVID-19 pandemic, more baby boomers are electing to start benefits earlier.
When claiming before age 65, they inadvertently turn on other benefits and can miss taking specific actions with Medicare and health savings accounts. Mistakes lead to unnecessary surprises and tax issues.
A Look at the Data
The Social Security Administration's OASDI Benefits Awarded: Retired Workers tables report when men and women started claiming benefits. A recently released table shows claiming ages between 1998 and 2022, a period in which claiming patterns have changed significantly.
A few examples:
- In 1958, 58% of men claimed at 62. In 2022, only 28% claimed that early.
- In 1958, 62% of women claimed at 62. In 2022, fewer than 30% did so.
- Between 1998 and 2007, 79% of men claimed benefits before their FRA (65 to 65 and 10 months).
- In the same sequence, 82% of women claimed before their FRA.
The first boomers reached age 62 in 2008, just as the Great Recession was gripping the United States.
- In 2008, 82% of men claimed between 62 and FRA versus 60% in 2022.
- In 2008, nearly 85% of women claimed between 62 and FRA versus 62.5% in 2022.
Overall, baby boomers have made remarkable adjustments toward waiting to claim.
COVID-19 Hinting at a New Trend
As younger boomers approached retirement, they received better advice from their financial advisors about the value of waiting. Social Security also stopped advocating for early claiming.
However, the pandemic still affects older workers in significant ways. And we see the claiming trend turning — more boomers are once again claiming earlier than is ideal.
Time will tell if this uptick is isolated to COVID concerns.
