Christine Banner planned to wait until her full retirement age of 67 to apply for Social Security benefits.
But the changes underway at the Social Security Administration, combined with an erratic stock market, changed her mind.
“Around the end of January, we started hearing more craziness about changes around Social Security and Elon Musk saying it was the world's biggest Ponzi scheme,” her husband, Clint, 67, told Yahoo Finance.
“We wanted to get her foot in the door and get it started with the idea of being grandfathered in with some sort of protection in the future.”
Banner, 65, will receive her first check in June of $1,633, $130 less each month than if she had waited two more years, and even smaller than if she held out until age 70.
Banner is among a rush of Americans applying for initial Social Security benefits this year, many earlier than planned.
'Dramatic increase' in applications
An official at the Social Security Administration said in an April operational meeting that the agency had not expected the “large surge” since January, highlighting what he called a “dramatic increase in initial applications for retired worker benefits.”
You can start receiving your Social Security retirement benefits at age 62. However, you’re entitled to full benefits only when you reach your full retirement age, or FRA. For example, if you turn 62 in 2025, your benefit would be roughly 30% lower than it would be at your full retirement age of 67.
If you delay benefits from your FRA until age 70, you earn delayed retirement credits. Those come to roughly an 8% per year increase for each year until you hit 70, when the credits stop accruing.
Most people, however, claim earlier, according to the SSA data. Nearly 30% of new Social Security beneficiaries claim benefits at age 62. Around 32% claim benefits after age 62 but before the FRA. Only 10% maximize their monthly benefit by claiming at age 70.
It’s a decision most people don’t take lightly. About 3 in 5 workers and more than 4 in 5 retirees have thought about how the age at which they claim Social Security can impact the amount they receive, according to a new report from the nonpartisan Employee Benefit Research Institute (EBRI).
That thinking seems to have turned the dial to file now for initial claims.
“If you look first at the last two full fiscal years, you see a very consistent pattern. There's a dip (in applications) around the holidays, a corresponding bump following in January and February, and then the low point is in the summer every year,” the SSA official said.
“This year, you can see a pretty significant deviation from the pattern,” he added, noting that filings were pretty calm from the end of October until January, then “there’s the big surge.”
In particular, the highest 10% of earners applied earlier than they have in the past, according to SSA data through mid-April.
As of mid-April, a total of 614,000 non-disability or retirement claims are pending, another official at the meeting noted. “It's an extremely high number.”
What’s driving the increase?
The Social Security Press Office, in an email, laid out three key reasons for the jump in applications:
Peak 65 Baby Boom. SSA says that's driving the "vast majority" of new applications, and it refers to the record number of Americans turning 65 and retiring. It's the biggest retirement surge in history, and it started last year.
The Social Security Fairness Act. This new law increases benefits for some retired public service workers and provides back pay for others beginning in March.
Cyclical mailers for Spouses and Surviving Spousespotentially entitled to a higher benefit. This applies when a spouse or surviving spouse applies for survivor benefits, or if they are already receiving benefits as a spouse and report the death of their spouse. If a higher benefit is available, the SSA will inform the individual via a mailing and adjust their payments to the larger amount.
But some experts doubt that the leap is so easily explained.
“There is always month-to-month variation, so we can't read too much into these things,” Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, told Yahoo Finance. “But it does seem like there's certainly, even by SSA's own account, a lot of fear and confusion and anxiety right now.”
Concern about the program's viability has been with us for a long time, she added. “Now all of that is amped up because there is so much buzz about Social Security and so much worry.”
Social Security beneficiaries could see a 17% cut in benefits in 2035 if no changes are made to the system. (Getty Creative) ·Douglas Sacha via Getty Images
The buzz she's referring to? Social Security is on shaky ground.
The 2024 Social Security and Medicare Trustees Report predicts that the combined retirement and disability trust fund reserves will go broke in 2035. And remember that last year, the economy was robust and wage growth was steady, which ramped up payroll tax payments that fund the program. As unemployment ticks up, fewer workers will be adding to the program, while a growing number of baby boomers begin to tap their benefits.
All of it has put more Americans on edge, especially those nearing retirement who are worrying about how much in benefits they can expect.
The harrowing predictions do not, however, mean there will be nothing left. There will still be money to pay benefits at that stage — though only 83% of what’s been promised to current and future beneficiaries.
In other words, without a fix, beneficiaries could see a 17% cut in benefits.
Higher call volumes and visitors
Meanwhile, seniors have been pressing for answers to their questions in droves. Calls to the agency’s 800 number have ballooned. Week-over-week call volumes are 22% higher than at the same time last year, according to the official at the meeting in late April.
“I think we have a lot of customers that, right now, a lot of Americans, that are very uneasy,” said Leland Dudek, acting Social Security commissioner, at the meeting in March. “And they need to understand that we are protecting their data, and that we will always have their data, and we can make sure their earnings record reflects the benefits that they will receive both now and in the future.”
Tell that to those seniors swarming the local field offices. “They're afraid of our systems going down,” another Social Security official said at the March meeting. “They're coming for earnings statements. They're asking us to print certified copies of these for them.”
'Fear out there'
“It's not surprising that there's fear out there, given the headlines and also that the administration and the agency are changing direction on this stuff almost weekly,” Mark Miller, an author and retirement expert, told Yahoo Finance.
That said, he added, “this is a highly personal decision. There could be a lot of reasons people file earlier than planned. It doesn't have to just be the politics at the SSA. People are losing their jobs, for example.”
He’s right. For those nearing retirement, a job loss can swiftly change your plans for Social Security claiming.
A loss of income, combined with the time and frustration involved in clawing their way back to work, often makes the decision to claim Social Security pretty straightforward.
Another deciding factor: rising costs. Nearly 3 in 10 Americans say inflation, or the high cost of living, is the most important financial problem facing their family today, according to a new Gallup poll, and a record-high 53% currently say their financial situation is getting worse.
For the Banners, rising costs were part of the decision to apply for benefits earlier than planned.
“We need a more stable income,” Clint Banner said. “We were so worried about multiple aspects of the environment, whether it's political or financial.”
