Majority of Americans Misunderstand Social Security Timing, Costing Thousands in Benefits

Millions of Americans are unknowingly sacrificing tens of thousands of dollars in retirement income due to poor timing in claiming Social Security benefits. The 2025 AARP 90th Anniversary Survey reveals a widespread lack of understanding about when to start collecting payments, with most Americans misinformed about the optimal age for maximizing benefits. Delaying Social Security past the age of 70 does not yield increased benefits, yet many seniors claim before this point, locking in permanently reduced payments for life [1].

According to the survey, only 24% of Americans know that the earliest age to claim is 62, and just 19% recognize that benefits are maximized at age 70. This knowledge gap is especially pronounced among those under 50, but even among older adults, 66% are unaware of the age that yields the highest monthly payment. AARP highlights that “most lack the knowledge necessary to make wise decisions about when to start receiving retirement payments,” a finding that underscores a broader systemic issue in retirement planning and public education [1].

The financial consequences of early claiming are significant. For example, a person who claims at age 65 instead of 70 would receive approximately $1,560 per month compared to $2,232 per month at age 70—based on a full retirement age of 67 and a hypothetical benefit of $1,800. Over a lifetime of 20 years starting at 65 versus 15 years starting at 70, the difference in total income is nearly $27,400. If a person lives past 85, the higher monthly payment continues to accumulate, potentially increasing the loss to between $50,000 and $100,000 or more [1].

Many seniors who claim too early do so out of concern that the Social Security program may face future cuts. A recent analysis by the Committee for a Responsible Federal Budget (CRFB) warns that if no changes are made, Social Security could reach a fiscal cliff in seven years that could reduce annual benefits by $18,000 for many retirees [1]. This fear leads some to cash in early, but experts stress that this strategy often backfires. Delaying benefits until age 70 remains the most effective way to maximize monthly income over the long term [1].

The issue is further compounded by the fact that many Americans rely heavily on Social Security as their primary source of income. The Social Security Administration reported that over 22 million seniors receive no other income beyond Social Security, making it critical for them to optimize their benefits [4]. However, without a clear understanding of the long-term implications of claiming early—such as reduced survivor benefits for spouses or the compounding effects of cost-of-living adjustments—many retirees are left in a financially vulnerable position [1].

Financial advisors stress the importance of personalized planning, particularly as life expectancy increases and inflation erodes purchasing power. While the Social Security Administration provides tools to help individuals estimate their benefits, the complexity of claiming strategies—including spousal benefits, survivor benefits, and disability considerations—requires professional guidance. As more Americans approach retirement, the need for better public education on Social Security planning becomes increasingly urgent [6].

Sources:

[1] https://fortune.com/2025/07/31/social-security-best-age-benefits-aarp-survey/

[4] https://www.aol.com/almost-22-million-seniors-live-073600897.html

[6] https://www.newsdirect.com/category/moneywise/