November 2015

Issue Brief: Social 

Security claiming age and 

retirement security

Office for Older Americans
1 CONSUMER FINANCIAL PROTECTION BUREAU

Table of contents

Table of contents.........................................................................................................1

Introduction .................................................................................................................2

Social Security is an important source of income for current and 

future retirees .......................................................................................................4

Millions of Americans are likely to face financial insecurity in their 

retirement years....................................................................................................6

Many retirees choose to take a substantial reduction in benefits by 

claiming early........................................................................................................8

Lack of and inaccurate information hinders many in making an 

informed claiming decision ...............................................................................11

Recommendations ....................................................................................................14

Resources..................................................................................................................16
2 CONSUMER FINANCIAL PROTECTION BUREAU

Introduction

Annually more than 2 million consumers make one of the most important financial decisions of 

their lives: choosing when to begin collecting Social Security retirement benefits. 0F

1 Yet, many 

make the decision based on limited or incorrect information.1F

2 As a result, many consumers start 

collecting benefits at the earliest possible claiming age without understanding that by claiming 

early, they receive a reduction in benefits that can threaten their financial security in 

retirement.2F

3 This lower benefit amount could be especially problematic in later life when

medical and health costs may be at their highest,3F

4 and Social Security becomes the primary 

source of income in retirement.4F

5 This brief describes the existing research on this issue and 

 

1 CFPB analysis of SSA, Annual Statistical Supplement, Table 6.B5.1 Number, average age, and percentage 

distribution, by sex and age at entitlement, 1998–2013 (2015), at 

http://www.ssa.gov/policy/docs/statcomps/supplement/2014/6b.html. (Referred to as “CFPB analysis of SSA’s 

Annual Statistical Supplement”)

2 In addition to limited or incorrect information, other factors contributing to a consumer’s decision to collect benefits 

early may include, among other things, poor health, unemployment, and short life expectancy. More information 

about the role of these factors can be found at Gov. Accountability Office, Challenges for Those Claiming Social 

Security Benefits Early and New Health Coverage Options (2014), at 54, available at 

http://www.gao.gov/assets/670/662727.pdf.

3 See, e.g., Wei Sun & Anthony Webb, How Much Do Households Really Lose by Claiming Social Security at Age 62?, 

SSRN (2009), at http://dx.doi.org/10.2139/ssrn.1408729; see also Courtney Coile, et al., Delays in Claiming Social 

Security Benefits, J. of Pub. Econ. Issue 84 (2002), at http://economics.mit.edu/files/635.

4 See, e.g., Sudipto Banerjee, How Does Household Expenditure Change With Age for Older Americans?, EBRI Issue 

Brief No. 9 (Sept. 2014), at http://www.ebri.org/pdf/notespdf/Notes.Sept14.EldExp-Only.pdf.

5 See, e.g., SSA, Income of the Population 55 or Older, 2012, Table 9.A1 Relative Importance of Social Security for 

Beneficiary Aged Units (Apr. 2014), at 

http://www.ssa.gov/policy/docs/statcomps/income_pop55/2012/sect09.html.
3 CONSUMER FINANCIAL PROTECTION BUREAU

provides a set of recommendations to help consumers plan ahead for this important financial 

decision.5F

6

 

6 The CFPB’s Office for Older Americans prepared this issue brief. We relied upon a compilation of Social Security 

Administration (SSA), US Census Bureau, and other government administrative data, surveys, and reports; peerreviewed articles; and CFPB analysis. 
4 CONSUMER FINANCIAL PROTECTION BUREAU

Social Security is an important 

source of income for current 

and future retirees

Since the Social Security Act became law 80 years ago, the program has increasingly played a 

critical role in ensuring retirement security for millions of older Americans. It provides benefits 

to nearly nine out of ten Americans aged 65 or older.6F

7

 Approximately two thirds of the nearly 40 

million Americans aged 65 and older who receive Social Security benefits depend on it for 50 

percent or more of their retirement income.7F

8 Social Security is particularly important for the 

growing number of beneficiaries aged 80 and older for whom it accounts for 70 percent or more 

of their income.8F

9

 (FIGURE 1)

 

7 See SSA, Basic Facts (Apr. 2014), at http://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf.

8 CFPB analysis of Social Security Administration, Income of the Population 55 or Older, 2012, Table 9.A1 Relative 

Importance of Social Security for Beneficiary Aged Units (Apr. 2014), at 

http://www.ssa.gov/policy/docs/statcomps/income_pop55/2012/sect09.html.

9 Id.
5 CONSUMER FINANCIAL PROTECTION BUREAU

FIGURE 1: AVERAGE SHARE OF INCOME FROM SOCIAL SECURITY AND OTHER SOURCES BY AGE 9F

10

 

10 Id.

55%

64% 69% 74%

45%

36% 31% 26%

0%

20%

40%

60%

80%

100%

65–69 70–74 75–79 80 or older

Other sources

of income

Social Security
6 CONSUMER FINANCIAL PROTECTION BUREAU

Millions of Americans are likely 

to face financial insecurity in 

their retirement years

On average, Americans reaching age 65 will live to about age 85.10F

11

 Consequently, consumers 

today will likely need sufficient income and savings to cover 20 years or more in retirement. In 

addition, retirement years may be more expensive than retirees expect as many will incur 

increased health and housing expenses in their later years,1F

12

 and many carry mortgages and 

other debts into retirement.12F

13

 

According to recent studies, many consumers at and near retirement are unprepared to meet 

these challenges.13F

14

 For example, four in ten late boomers (currently ages 51-59) are reaching 

 

11 See SSA, Calculators: Life Expectancy (2015), available at http://www.ssa.gov/planners/lifeexpectancy.html.

12 See, e.g., Sudipto Banerjee, How Does Household Expenditure Change With Age for Older Americans?, EBRI Issue 

Brief No. 9 (Sept. 2014), at http://www.ebri.org/pdf/notespdf/Notes.Sept14.EldExp-Only.pdf.

13 See CFPB, Snapshot of older consumers and mortgage debt (May 2014), at 

http://files.consumerfinance.gov/f/201405_cfpb_snapshot_older-consumers-mortgage-debt.pdf.

14 See Jack VanDerhei, What Causes EBRI Retirement Readiness Ratings to Vary: Results from the 2014 Retirement 

Security Projection Model, EBRI Issue Brief, No. 396 (Feb. 2014), at 5, available at

http://www.ebri.org/pdf/briefspdf/EBRI_IB_396_Feb14.RRRs2.pdf. (Referred to as “VanDerhei, What Causes 

EBRI Retirement Readiness Ratings to Vary”); see also, Alicia Munnell, et al., NRRI update shows half still falling 

short, December 2014, CRR Issue Brief 14 (Dec. 2014), at http://crr.bc.edu/wp-content/uploads/2014/12/IB_14-

20-508.pdf.
7 CONSUMER FINANCIAL PROTECTION BUREAU

retirement with limited or no savings and are projected to face a savings shortfall.14F

15

 (FIGURE 2) 

Furthermore, with the decline in coverage from traditional defined-benefit pension plans that 

pay a regular monthly payment, Social Security is the only guaranteed monthly income for an 

estimated 69 percent of older consumers.15F

16

FIGURE 2: PERCENT OF CONSUMERS WITH PROJECTED RETIREMENT SHORTFALLS BY COHORT 16 F

17

 

15 See Vanderhei, What Causes EBRI Retirement Readiness Ratings to Vary, supra. The retirement savings shortfall 

is a measure of the probability that households headed by a consumer 65 and older will run short of money in 

retirement. This probability is generated from a model that simulates retirees’ future expected sources of income 

and assets to cover regular expenses and uninsured medical costs for the duration of their retirement.

16 CFPB analysis of Census Bureau, Current Population Survey, 2015 Annual Social and Economic Supplement, 

Table PINC-08. Source of Income in 2014–People 15 Years Old and Over, by Income of Specified Type in 2014, Age, 

Race, Hispanic Origin, and Sex (2015), at 

http://www.census.gov/hhes/www/cpstables/032015/perinc/pinc08_000.htm.

17 See Vanderhei, What Causes EBRI Retirement Readiness Ratings to Vary, supra at 5. Percentages may not sum up 

to 100 percent due to rounding.

57% 59% 58%

43% 42% 42%

0%

20%

40%

60%

80%

100%

Early Boomers

(born 1946-1955)

Late Boomers

(born 1956-1964)

Generation X

(born 1965-1976)

With a Savings

Shortfall

Without a

Savings

Shortfall
8 CONSUMER FINANCIAL PROTECTION BUREAU

Many retirees choose to take a 

substantial reduction in benefits 

by claiming early

Notwithstanding that millions of Americans rely on Social Security benefits for a large portion of 

their retirement income, many retirees choose to take a substantial reduction in monthly 

benefits by starting to collect before their full retirement age (FRA), with many collecting at the 

earliest eligibility age (EEA) of 62. 17F

18 For example, in 2013, 1.7 million (or 75 percent) 

consumers claimed their Social Security benefits before their full retirement age, and 1 million 

(or 46 percent) claimed at their earliest eligibility age. 18F

19 (FIGURE 3)

 

18 Survivors retirement benefits can be claimed as early as age 60. See SSA, Survivors Planner: If you are the 

worker's widow or widower (2015), at http://www.socialsecurity.gov/planners/survivors/ifyou2.html.

19 See CFPB analysis of SSA’s Annual Statistical Supplement, supra. An alternative analysis that focused on claiming 

patterns by individuals born in the same year found that nearly 40 percent of consumers that reached age 62 in 

2013 claimed their benefits at their earliest eligibility age. See Alicia Munnell & Anqi Chen, Trends in Social 

Security Claiming, CRR Issue Brief 15 (May 2015), at 3, available at http://crr.bc.edu/wpcontent/uploads/2015/05/IB_15-8.pdf.
9 CONSUMER FINANCIAL PROTECTION BUREAU

FIGURE 3: NUMBER OF SOCIAL SECURITY CLAIMS SUBMITTED IN 2013 BY AGE 19F

20

Monthly Social Security payments vary significantly depending on the age at which someone 

chooses to start collecting benefits.20F

21 (FIGURE 4) Consumers receive full benefits if they start 

collecting at their full retirement age (FRA), which ranges from 66 to 67 depending on the

individual’s year of birth.21F

22 Consumers, however, can choose to collect benefits before or after 

their full retirement age, from age 62 to age 70. Consumers could see at least a 25 percent 

 

20 See CFPB analysis of SSA’s Annual Statistical Supplement, supra.

21 The formula that SSA uses to calculate benefits is designed to be “actuarially fair,” which means that a person who 

lives to the average age will receive the same total amount of benefits regardless of whether they claim early (and 

receive smaller checks for a longer period of time) or late (and receive larger checks for a smaller period of time). 

22 See SSA, Retirement Planner: Benefits by Year of Birth (2015), at

http://www.socialsecurity.gov/planners/retire/agereduction.html.

1,028,800

638,400

399,000

111,500

51,700

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

At Earliest

Claiming Age

(62)

Before FRA (63

to 65)

At Full

Retirement Age

(66)

After FRA (66 to

69)

At Maximum

Claiming Age

(70)
10 CONSUMER FINANCIAL PROTECTION BUREAU

permanent reduction in monthly benefits by claiming early; whereas they can get as much as a 

32 percent permanent increase (8 percent per year) by claiming after their full retirement age -

up to age 70.2F

23

 

FIGURE 4: SOCIAL SECURITY MONTHLY BENEFIT COMPARISON BY CLAIMING AGE 23F

24

 

23 See SSA, Effect of Early or Delayed Retirement on Retirement Benefits (2015), at 

http://www.socialsecurity.gov/OACT/ProgData/ar_drc.html.

24 This figure illustrates as an example consumers born between 1943 and 1954 with an expected monthly benefit of 

$1,000 at age 66.

75%

($750)

80%

($800)

87%

($870)

93%

($930)

100%

($1000)

108%

($1080)

116%

($1160)

124%

($1240)

132%

($1320)

0%

20%

40%

60%

80%

100%

120%

140%

62

(earliest

claiming

age)

63 64 65 66 (full

retirement

age)

67 68 69 70

(maximum

claiming

age)
11 CONSUMER FINANCIAL PROTECTION BUREAU

Lack of and inaccurate 

information may hinder many in 

making an informed claiming 

decision

Studies have shown that people claiming benefits before their full retirement age have more 

limited knowledge of Social Security benefits and claiming options when compared with those 

who claim at their full retirement age or later.24F

25

 

Several recent surveys show that a significant portion of non-retired consumers are confused 

about and/or lack basic knowledge of Social Security information that may help them make 

more optimal benefit claiming decisions for their individual situations.25F

26 For example, one study

 

25 See AARP, The Impact of Claiming Age on Monthly Social Security Retirement Benefits: How Knowledgeable Are 

Future Beneficiaries? (2012), at 45-47, available at http://assets.aarp.org/rgcenter/general/Impact-of-ClaimingAge-On-Monthly-Social-Security-Retirement-Benefits.pdf. In addition, other studies show that consumers’ 

preference for claiming early is responsive to the information that they are provided about Social Security, and the 

way in which it is framed. See, e.g., Melissa Knoll, Behavioral and Psychological Aspects of the Retirement 

Decision, Social Security Bulletin, Vol. 71 No. 4, (2011), at

http://www.ssa.gov/policy/docs/ssb/v71n4/v71n4p15.html.

26 See, e.g., Joanne Yoong, et al., What do people know about Social Security? CESR Working Paper 2015-022 (2015),

https://static.usc.edu/documents/2015-022.pdf . (Referred to as “Yoong, What do people know about Social 

Security?”); see also MassMutual, MassMutual Research: Survey Shows Concerning Knowledge Deficiency about 

Social Security Retirement Benefits, (June 2015), at https://www.massmutual.com/about-us/news-and-pressreleases/press-releases/2015/06/12/10/30/massmutual-research-survey-shows-concerning-knowledge-deficiency.

(Referred to as “MassMutual, MassMutual Research”); see also AARP & CFP, Social Security Planning in 2015 & 

Beyond: Perspectives of Future Beneficiaries and Financial Planners (Oct. 2015), at
12 CONSUMER FINANCIAL PROTECTION BUREAU

found that only 21 percent of pre-retirees surveyed knew their full retirement age.26F

27 Only 13

percent knew how their benefits would change if they claimed before, at, or after their full 

retirement age.27F

28 Only about five percent of those surveyed said that they knew how their 

benefits are calculated.28F

29 (FIGURE 5) In addition, an AARP survey found that most pre-retirees

lacked knowledge about Social Security spousal and survivor benefits, and the effects that 

earnings from work will have on their benefits if they claimed them before full retirement age.29F

30 

FIGURE 5: SELF- REPORTED KNOWLEDGE OF SOCIAL SECURITY AMONG NON-RETIREES 30F

31

 

http://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2015/fpa-soc-sec-and-beyond-resecon.pdf. (Referred to as “AARP & CFP, “Social Security Planning in 2015 & Beyond”); Nationwide Retirement 

Institute, Consumer Social Security PR Study (Jul. 2015), at https://ssc.nwservicecenter.com/media/pdf/NFM14532AO.pdf?_ga =1.72482835.1063782242.1443126984. (Referred to as “Nationwide, Consumer Social Security 

PR Study”)

27 See Yoong, What do people know about Social Security?, supra.

28 Id.

29 Id.

30 See AARP & CFP, Social Security Planning in 2015 & Beyond, supra.

31 See Yoong, What do people know about Social Security?, supra. Percentages may not sum up to 100 percent due to 

rounding.

14% 22% 24%

20%

29%

41%

44%

37%

30%

21% 13% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Eligibility age for full

retirement benefits

How benefits change if you

claim sooner or later

How retirement benefits

are calculated

Very

knowledgeable

Somewhat

knowledgeable

Not too

knowledgeable

Not at all

knowledgeable
13 CONSUMER FINANCIAL PROTECTION BUREAU

In addition, consumers often do not fully understand the protections afforded by Social Security

benefits.31F

32

 Social Security benefits are payable for a beneficiaries’ lifetime and adjusted to keep 

pace with inflation. For many consumers, Social Security is the only source of retirement income 

that offers these protections.32F

33

 These are valuable features that reduce consumers’ risk of 

outliving their money if they live into their later years or experience a longer than planned 

retirement. The monetary value of these protections is reduced, however, when a consumer 

receives benefits early.3F

34

 

As Americans are living longer, the number of consumers who may need Social Security’s 

protections against longevity risk is increasing. For example, in 2014, half of consumers who 

claimed at age 62 are expected to live to age 87.34F

35

 Accordingly, the need for consumer 

understanding of Social Security’s protections later in life is likewise increasing.35F

36

 

32 See, e.g., AARP, Assessing Current and Future Beneficiaries’ Knowledge of Social Security Benefits (Jul. 2011), at 

49, available at http://assets.aarp.org/rgcenter/general/social-security-assessing-knowledge-of-benefits.pdf. 

(showing that 20 percent of consumers age 55 to 61 were unaware of that their Social Security benefits were 

adjusted to keep up with increases in cost of living); see also Nationwide, Consumer Social Security PR Study, 

supra at 17-18 (showing that 34 percent of pre-retirees do not know that benefits are protected against inflation and 

46 percent do not think that benefits are guaranteed for the beneficiary’s lifetime).

33 CFPB analysis of Census Bureau, Current Population Survey, 2015 Annual Social and Economic Supplement, 

Table PINC-08 Source of Income in 2014–People 15 Years Old and Over, by Income of Specified Type in 2014, Age, 

Race, Hispanic Origin, and Sex (2015), at 

http://www.census.gov/hhes/www/cpstables/032015/perinc/pinc08_000.htm. 

34 See, e.g., John Shoven & Sita Nataraj Slavov, When Does It Pay to Delay Social Security? The Impact of Mortality, 

Interest Rates, and Program Rules, NBER Working Paper No. 18210 (2012), at 

http://www.nber.org/papers/w18210.

35 See, e.g., James Mahaney & Peter Carlson, Rethinking Social Security Claiming in a 401(k) World, in 

Recalibrating Retirement Spending and Saving, Pension Research Council Working Paper 2007-18 (2008), at 141-

167, available at http://www.pensionresearchcouncil.org/publications/document.php?file=904.

36 See Melissa Knoll & Anya Olsen, Incentivizing Delayed Claiming of Social Security Retirement Benefits Before 

Reaching the Full Retirement Age, Social Security Bulletin No. 4 (2014), at 28, available at 

https://www.ssa.gov/policy/docs/ssb/v74n4/v74n4p21.html. By 2050, half of consumers who claim at age 62 are 

expected to live to age 92. See SSA, Early Eligibility Age Beneficiaries in 2050 (2015), available at

http://www.ssa.gov/retirementpolicy/projections/eea-2050.html.
14 CONSUMER FINANCIAL PROTECTION BUREAU

Recommendations

More than 10,000 people in the United States turn age 62 every day, and nearly all of these 

consumers will have to make a decision about whether to take their Social Security benefits 

today or at a later age.36F

37

 However, 44 percent of consumers start considering their retirement 

decision one year or less before they actually retire.37F

38 Planning ahead and arriving at this 

critical point with complete and accurate information about their claiming options can better 

equip consumers to make the decision that is right for them about when to start receiving their 

Social Security benefits. 

Here are five recommendations to help consumers make an informed decision:

 Know your full retirement age. It varies depending on the year you were born. It is 

the starting point for SSA’s calculations of increases and decreases to your monthly 

benefits. The full retirement age is the age at which you can start working and collecting 

simultaneously without facing a reduction in benefits.

 Don’t claim early if you don’t have to. Allowing your benefits to grow for even one 

year makes a difference in your benefits. You’ll get an additional 5 to 8 percent in 

benefits for every year you claim after age 62. A higher monthly benefit could be 

important when you are older, which is when Social Security may play a more central 

 

37 See SSA, Never Beneficiaries, Aged 60–89, 2015 (2015), at http://www.ssa.gov/retirementpolicy/factsheets/never-beneficiaries.html (showing that only 3 percent of the population ages 60 to 89 never become 

beneficiaries).

38 See EBRI, How Long do Workers Consider Retirement Decision, Fast Facts from EBRI No. 91 (2008), at 1, 

available at http://www.ebri.org/pdf/fastfact07162008.pdf.
15 CONSUMER FINANCIAL PROTECTION BUREAU

role in your retirement income. At that point, your other sources of income and savings 

may be depleted. 

 Know your numbers. Be aware of how much money comes in and goes out each 

month. Start with a simple budget that accounts for your income and expenses. Consider 

both your actual income and expenses before retirement and your expected income and 

expenses after you retire. This can help you understand how a reduced or increased 

benefit will affect your ability to meet your needs in retirement. In addition, this kind of 

budgeting can help you decide if you should reduce your expenses and pay off any debts 

before retiring.

 Keep working if you can. Staying in the workforce – full or part time – for even one 

or two additional years can earn you an even bigger increase in your Social Security 

benefit by replacing years with low or no earnings from your earnings record. Working 

longer also gives you more time to save for retirement.

 Consider your spouse’s long-term needs. Because surviving spouses receive the 

higher of the two spouses’ benefits, it makes sense for higher earning spouses to claim at 

their full retirement age or after to get the full or highest possible benefit. This can 

minimize the reduction in income a surviving spouse may experience.
16 CONSUMER FINANCIAL PROTECTION BUREAU

Resources

Planning for Retirement

This interactive tool will show your estimated benefits at different claiming ages and will help 

you navigate your decision of when to claim your Social Security retirement benefits. Begin 

planning at consumerfinance.gov/retirement

my Social Security account

my Social Security account will show your actual earnings record and your estimated retirement 

and survivors benefits. You can also see and verify the estimated Social Security and Medicare 

taxes you’ve paid. Open or view your account at socialsecurity.gov/myaccount 

myRA 

myRA (my Retirement Account) is a retirement savings program offered by the U.S. Department 

of Treasury with no minimum contributions, fees, or risky investments, for those without a 

retirement savings program from their employer. Open or view your account at myra.gov