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Claiming Social Security at 65? You Might Regret That

When it comes to filing for Social Security, you get plenty of choices. The earliest age to sign up for benefits is age 62. While there’s technically no “last age” to file, there’s no financial incentive to delay your claim beyond age 70.

Smack in the middle of that window is age 65. And you might assume that it’s a good time to sign up for benefits. But before you make that decision, consider the drawbacks of claiming Social Security at that time.

Can you afford a hit to your monthly income?

Age 65 is when Medicare eligibility begins. And if you’re enrolling in Medicare, you may be inclined to sign up for Social Security at the same time. In fact, you might think you should sign up for benefits because you’ll be using the Social Security Administration’s website to enroll in Medicare online.

But age 65 is not full retirement age (FRA) for Social Security purposes. And claiming benefits before FRA means reducing them in the process on a permanent basis.

If you were born in 1960 or later, FRA is age 67. If you were born earlier, it’s either 66 or 66 and a specific number of months.

But let’s assume your FRA is 67. If you claim Social Security at age 65, you’ll slash your monthly benefits by about 13.34%. That may not seem like a big deal at first, but in reality, it could be huge.

Imagine that 13.34% reduction results in $200 less in Social Security income each month, or $2,400 a year. In case you haven’t noticed, inflation has been soaring this year, and in a situation like that, not having an extra $200 on hand could be financially catastrophic. 

Then there’s the fact that Social Security will only replace about 40% of your pre-retirement earnings to begin with, assuming you make an average salary. Most seniors need roughly twice that much income to maintain a decent lifestyle.

If you have a large nest egg, you may be in a position to manage a 13.34% reduction in benefits just fine. But if you’re low on savings, you may not be able to afford any sort of hit to your benefits whatsoever.

Don’t file too early

Tempting as it may be to claim Social Security in conjunction with your Medicare enrollment, waiting until FRA to sign up for benefits could end up being a much better financial move. In fact, if you’re nearing retirement without much savings, you may want to consider delaying your filing past FRA. For each year you do, up until age 70, your benefits will increase by 8%. And that extra income could make it so you’re able to manage your bills without worry.

You should also know that collecting Social Security is not a prerequisite to getting Medicare coverage. If you’re not signed up for benefits, you’ll have to pay your Medicare premiums directly, as opposed to having them taken out of your Social Security payments. But that shouldn’t serve as a reason to file early.

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