Marty McGowan filed for Social Security the morning after his 67th birthday. That was not his original plan. He wanted to wait until he turned 70 to claim benefits.
This would have given him an extra $800 a month. However, like many other retirees recently, he was worried about the current administration and the economy. This made him file earlier than planned.
Marty was not alone. An extra 276,000 retirees claimed benefits on their earnings records this fiscal year through April, a 13% increase from the same period a year ago, according to the Urban Institute.
Officials at the Social Security Administration called the rise “dramatic.” They said it was partly due to economic anxiety. “It is worrisome because for most people, claiming early is not a good decision,” said Jack Smalligan, a senior policy fellow at the Urban Institute. They’re nervous about potential threats to the Social Security Administration and their benefits.
They are also worrying about their 401(k) plans.”
The Trump administration’s push to reduce federal bureaucracy affected Social Security. Many Americans close to or in retirement feared that job cuts and policy changes might threaten their access to benefits, leading to jammed phone lines and overwhelmed offices.
Elon Musk spread claims about widespread fraud at the agency, and his Department of Government Efficiency drove several changes, which added to the confusion.
This situation and broader economic uncertainties seemed to impact retirees’ financial decisions. Agency officials acknowledged this during recent meetings. They noted other strains on the system as well.
“Fearmongering has driven people to claim benefits earlier. They’re afraid they might lose access altogether,” said Leland Dudek, the agency’s then-acting commissioner, during a March 28 meeting.
Economic anxiety drives early claims
Higher earners also claimed benefits earlier than in the past. Some experts say this is a fear-driven decision. Another factor was that many retirees switched from lower spousal payments to higher benefits based on their earnings records.
This followed a regular notice from the agency. Filing for benefits earlier can have broad implications. It affects not just the worker but also their spouses, who may receive benefits based on their earnings records.
Workers become eligible for retirement benefits at age 62. However, taking benefits early, particularly before the full retirement age of 67 for those born in 1960 or later, results in lower monthly payments. Economists and financial planners advise viewing Social Security as longevity insurance.
Opting to wait for a higher benefit can pay off if one lives a longer life, especially if there’s a risk of outliving one’s savings. Delaying Social Security often presents a better deal than buying an annuity in the private sector. “You can’t buy an inflation-indexed annuity anywhere comparable in price in the private sector than you can by just delaying your benefit,” Smalligan noted.
For McGowan, several factors led him to file earlier than planned. He and his wife, Lynn, decided to retire in 2022. Although they intended to draw down their retirement savings and file for Social Security at age 70, recent developments eroded their confidence.
Musk’s controversial remarks about the program and Trump’s unpredictable policies, including a recent tariff plan, significantly affected their retirement portfolio. The couple decided to hedge their bets. McGowan filed for Social Security while his wife planned to wait a bit longer.
The spike in claims is putting the agency on track to receive nearly 4 million claims for retirement benefits in the 2025 fiscal year. According to the Urban Institute, this is a 15% increase from 2024. The Social Security Administration did not respond to inquiries for comment.
However, McGowan was pleasantly surprised by the smooth claiming process. His benefits started just 12 days after filing online.
