Report: The Changing Picture of Who Claims Social Security Early

As individuals approach their 60s, they face the important decision about when to start claiming Social Security retirement benefits. A report by Philip Armour and David Knapp of the RAND Corporation – shared via AARP’s Public Policy Institute – examines the characteristics of those who decide to start collecting at the early eligibility age (EEA) of 62 compared with those who wait until later.

A companion report, “The Consequences of Claiming Social Security Benefits at Age 62,” asks what financial consequences the decision to collect early might have for the individual over time.

Importantly, this research also speaks to the potential impacts of the novel coronavirus; as short-term furloughs during the recession turn into long-term unemployment, the findings suggest that employment losses may lead to earlier claiming—in particular among those with less education and those living in more rural areas. This could affect the financial security of a whole cohort of retirees in the coming decades given the penalties associated with early claiming.

According to the report, for both men and women, individuals who claim Social Security benefits at 62, as compared with those who claim later:

  1. Have less education, on average;
  2. Are more likely to live in rural areas;
  3. Are more likely to already have a work-limiting health condition;
  4. Have a lower reported likelihood of living to age 75;
  5. Are less likely to have a job before turning age 62;
  6. If employed before turning age 62, earn less, on average; and
  7. If employed before turning age 62, are more likely to have a physically demanding job.

With respect to wealth and pension comparisons of age-62 claimers to later claimers, individuals who claim Social Security benefits at 62:

  1. Are substantially more likely to already be receiving pension income; and
  2. Are less likely to have defined contribution plan assets.

But even after accounting for the interrelationship of observable demographic, employment, and economic factors using regression analysis, these characteristics account for only a small fraction of the shift toward later claiming. Other reasons—such as longer life expectancy, a greater ability to work longer, better understanding of the financial benefits of waiting to claim Social Security benefits, and stronger incentives to claim later due to changes in Social Security benefit rules—likely influence people to delay claiming.

Read the companion report, “The Consequences of Claiming Social Security Benefits at Age 62.”