Marty McGowan had planned to wait until age 70 to claim Social Security benefits. But like many other retirees, he decided to file earlier than expected at age 67. “The market drop was the final straw,” McGowan said.
He is not alone in his decision. According to the Urban Institute, an additional 276,000 retirees claimed benefits on their earnings records this fiscal year through April, a 13 percent increase from the same period last year.
Officials within the Social Security Administration called the rise “dramatic.” While several factors contributed to the surge, experts say anxiety played a significant role. “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 the threats to the Social Security Administration and their benefits while simultaneously looking at their 401(k), if they have one, and worrying about that.
The anxiety stems from economic uncertainties and significant policy changes that have shaken Social Security’s structure and the broader financial markets.
Many retirees feared that job cuts and other policy shifts within the Social Security Administration could jeopardize their benefits. This led to jammed phone lines and overwhelmed offices. The rapid increase in early filings is due to economic and administrative concerns.
It highlights the importance of stability and clear communication from government institutions in protecting both current and future retirees. Recent adjustments have caused worries about delayed checks and deteriorating customer service at the Social Security Administration (SSA). The Trump administration has made significant changes, including staff and field office reductions, limited phone service, and increased monthly garnishments from Social Security beneficiaries who receive overpayments.
These changes affect current beneficiaries and those preparing to claim benefits. Expect potential delays if you’re retiring soon and planning to start Social Security checks. It usually takes at least 30 days to receive your first check after your application is processed, but it could sometimes take up to 45 days.
An SSA official noted that field offices struggle with timely processing.
Market anxiety influences Social Security claims
They advise applying up to four months before you want to start receiving benefits.
Ageism continues to be a major problem in the job market. Many employers consider 62 the cutoff for working and 58 for hiring, making it challenging for older job seekers. Nearly half of workers expect to work past 62, according to the Federal Reserve Bank of New York.
However, many are forced to retire earlier than planned. About 3 in 5 retirees stop working before age 65 due to circumstances beyond their control. Some retirees manage their finances by delaying Social Security benefits until age 70 to maximize their monthly payments.
Delaying benefits can increase retirement credits by about 8% per year. However, not everyone has the financial stability to wait until 70. Roth conversions can be a strategic move to minimize taxes in retirement.
Shifting assets from a traditional IRA or 401(k) to a Roth IRA requires paying taxes on the converted amounts. However, the growth within a Roth IRA is tax-free. This strategy can provide tax-free income in retirement and eliminate required minimum distributions.
Numerous comments highlight dissatisfaction with customer service at the SSA, citing long wait times and difficulties in accessing services, particularly after recent cuts. Reduced staffing levels and field office closures have exacerbated these issues, leading to longer wait times for assistance. Kathleen Romig from the Center on Budget and Policy Priorities reports that SSA has eliminated 7,000 jobs and plans additional cuts.
This will likely continue to harm applicants and beneficiaries. Jason Fichtner, executive director at the Alliance for Lifetime Income, notes that the SSA’s current operating levels and outdated computer systems will likely result in ongoing service delays and breakdowns. Despite these challenges, staying informed and prepared can help mitigate the impact of these changes.
Engaging with credible sources and planning for retirement can provide some control over the uncertainties.
