The Social Security Mistake That Can Cost Retirees $100K Over Time
The Social Security Administration’s most recent data shows that Social Security accounts for nearly one-third of income for adults ages 65 and up. However, more than 4 in 10 retirees rely on benefits for at least half of their income, and nearly 15% count on their monthly payment for 90% of every dollar they spend.
With so much on the line, there’s no room for error — and one error, in particular, could cost you six figures in your golden years.
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A Risky New Trend
According to the Urban Institute, over half a million more people claimed Social Security in 2025 than in the year prior, a historic 15% increase. Between 2012 and 2024, the average annual increase was 3%.
The report concluded that a rise in recipients claiming benefits early — before their full retirement age of 67, for most — is driving the sharp spike in new applications. It’s a stark reversal of a 20-year trend of beneficiaries claiming Social Security later in life, according to the Center for Retirement Research at Boston College — and that shift that could compromise the financial security of millions of retirees.
What’s Driving the Pattern?
AARP expanded on the Urban Institute's analysis with its own study on the reasons behind the dramatic move toward claiming Social Security before it pays the full benefit — and it’s not necessarily due to increased necessity.
The largest plurality, nearly half (49%), are getting while the getting is good because they believe — right or wrong — that Social Security is facing insolvency and that benefits will be reduced or eliminated in the future. Naturally, many others might simply need the income now — but the decision will come at a steep price.
The Steep Cost of Retiring Early
The Social Security Administration allows recipients to claim benefits up to 60 months before their full retirement age, but it permanently reduces their monthly payment for those who do.
The early retirement deduction is 5/9 of 1% per month, up to 36 months.
Beyond that, the reduction is 5/12 of 1% per month.
Those who claim when they’re first eligible at 62 forfeit 30% of their benefit.
Less Now or More Later
The Social Security Administration reported that the average monthly retirement benefit is $2,026.41 as of April.
If the average recipient claimed benefits at 62, the early-retirement reduction would be $607.92, leaving them with just $1,418.49 per month, or $17,021.88 per year, instead of $24,316.92.
That’s an annual difference of $7,295.04, which adds up to over $100,000 lost in less than 14 years.
On the flip side of the coin, the Social Security Administration rewards those who wait to claim until after 67 with delayed retirement credits, which increase their checks.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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