Unexpected increase in individuals accessing Social Security benefits
Turning the Tide on Retirement: An Unexpected Twist in Social Security Claims
It's no secret that Social Security retirement claims usually follow a predictable path each year, with an increase due to our aging population[1]. But this spring, something unexpected happened—a surge in the number of people applying for retirement benefits.
Between January and May, the number of claims was, surprisingly, nearly 18% higher than during the same period the previous year[1]. And this growth isn't just a minor fluctuation—it's disconcerting, says Jack Smalligan, senior policy fellow at the Urban Institute[1].
So why this sudden upsurge? According to Smalligan, there might be a couple of reasons[1]. For one, we might be seeing a rush of Baby Boomers retiring, peaking a wave that was already on the horizon[2]. Another contributing factor could be a recent rule change that increases Social Security benefits for certain individuals with pensions[2].
However, there's another factor at play that seems particularly relevant—concerns over the economic future under the current administration[2].
'Better Safe Than Sorry'
According to a now-deleted agency operational report in late April, claims by 62-year-olds, the earliest age you can apply, showed significant year-over-year increases[2].
Bill Armstrong, living in the quaint town of Berthoud, Colorado, is just one of those 62-year-olds[2]. Tracing a career in IT testing software, Armstrong was diagnosed with prostate cancer, was laid off from his tech job, and faced the rocky currents of government contract work[2]. By fall, he found himself job searching with no luck[2]. The election result spurred him to consider filing for early Social Security benefits, assuming that the government might raise the retirement age or that he'd have trouble finding work due to administration-related cutbacks[2].
"With the election and the impetus of Project 2025, I thought my career might be over as I know it," said Armstrong[2]. "I'm battling cancer, I'm married with a spouse, I'm single income. And I decided I better get in the system before they move that age higher."
You might argue that Armstrong is preparing for the worst, but as he points out, he paid into the system for 42 years[2].
The Fine Line Between Prudence and Regret
Karen McCahey, now 66, also advanced her timeline once the new administration took office[2]. "I was originally not going to claim until I was like 70. That was my goal," she says[2]. "But I no longer want to wait that long."
Her fears of the administration, potential cuts to vital services like Medicaid, and a shorter life expectancy due to complications like the pandemic have caused McCahey to think twice about waiting until 70[2]. With her financial advisor's warning in mind that waiting to claim benefits is often the smart move, McCahey is choosing to apply early[2]. After all, she says, she can always store the money in the bank for safer days.
Of course, early claims mean reduced benefits for the rest of McCahey's life, a compromise she seems willing to make[2].
Navigating the Financial Waters of Retirement
The surge in applications from high-earning 62-year-olds is especially troubling given that they can generally afford to wait longer to claim their higher benefits[3]. It might indicate that something more profound is behind their decision than merely a financial need[3].
And while Kathleen Romig, who directs Social Security and disability policy at the Center on Budget and Policy Priorities, understands the anxiety over the long-term viability of benefits, Security won't be disappearing anytime soon[3]. As long as people continue to pay into the system, Social Security benefits will continue to be paid out[3].
Ultimately, Smalligan counsels against panic claiming. If you're considering an early retirement, think hard about the consequences—and the potential for policy changes that aren't as drastic as they might seem[3].
"There's no reason to think that people's benefits are at risk," says Smalligan[3]. "If Congress were to do something drastic like raising the early retirement age, they'd typically provide a lengthy lead time."
So, if you find yourself leaning toward an early retirement, weigh your options—but don't panic. After all, there's always the chance to reverse your decision within the first 12 months after approval[3]. And remember, you have the power to adjust your plan to account for any changes that might come your way.
- The surge in Social Security retirement claims might be due to concerns over the economic future under the current government, with individuals like Bill Armstrong and Karen McCahey choosing to apply early for personal-finance reasons, fearing potential cuts or changes in policy.
- Despite the economic uncertainties, Jack Smalligan, senior policy fellow at the Urban Institute, urges against panic claiming, emphasizing that Social Security benefits won't disappear anytime soon, provided people continue to pay into the system, and any significant policy changes would likely have a lengthy lead time.
