Social Security is a key source of income for millions of Americans when they retire. It helps cover basic needs like housing, food, and medical expenses. But did you know that one simple decision can reduce your Social Security payments by as much as 30%—and that cut lasts for your entire life?

Many people aren’t fully aware of this risk, and unfortunately, they only realize the impact when it’s too late to change. Let’s break down exactly what’s happening, how it works, and what you can do to avoid falling into this trap.

What’s Happening With Social Security?

In the U.S., you’re allowed to start collecting Social Security retirement benefits as early as age 62. At first glance, that seems like a great option. After all, who wouldn’t want to stop working earlier and enjoy life? But there’s a catch: claiming Social Security benefits before your full retirement age (FRA) leads to a big penalty. This penalty lowers your monthly payments for the rest of your life.

Full retirement age depends on your birth year. For most people born after 1960, FRA is 67 years old. If you claim benefits before that age, you’ll face a reduction of around 5% to 6% for each year you retire early. Over time, that really adds up.

For example, let’s say your full benefit at 67 is $1,400 per month. If you retire at 62, your payment could shrink to about $980 per month—a 30% reduction. And this isn’t a temporary cut. Even when you turn 70 or 80, your monthly payment will stay at that lower amount, aside from small cost-of-living increases.

Why Do People Choose Early Retirement?

There are many reasons why people decide to retire at 62. Some feel physically and mentally exhausted after decades of work. Others may face health problems or worry they won’t live long enough to enjoy retirement if they wait too long. For many, starting Social Security early feels like a reward after years of hard work.

But while the idea of early retirement sounds attractive, it can be risky in the long term. Life expectancies are increasing, and many retirees may live 20 or 30 years after they stop working. Having less money coming in each month can cause financial stress down the road—especially when unexpected medical costs or emergencies arise.

How Big Is the Reduction?

The reduction is significant and permanent. Here’s a simple breakdown:

• Retire at 67 (full retirement age): You get 100% of your benefit.
• Retire at 66: You get around 93.3% of your benefit.
• Retire at 65: You get about 86.7% of your benefit.
• Retire at 64: You get about 80% of your benefit.
• Retire at 63: You get about 73.3% of your benefit.
• Retire at 62: You get about 70% of your benefit.

That’s a 30% drop from what you’d get if you waited until full retirement age.

What If You Change Your Mind?

There is one way to undo your early retirement decision, but it comes with strict rules. If you apply for benefits and then realize you made a mistake, you have up to 12 months to withdraw your application. But here’s the catch: you must repay every dollar you’ve received so far, including any payments made to your spouse or children based on your application.

Most people either don’t know about this option or can’t afford to pay the money back. That’s why it’s so important to make a smart decision from the start.

How Can You Maximize Your Benefits?

If you’re planning your retirement, here are some simple ways to make sure you’re getting the most out of Social Security:

1. Wait Until Full Retirement Age
   This is the simplest way to avoid penalties. For most people born after 1960, the FRA is 67. If you wait until then, you’ll receive your full benefit.
2. Delay Beyond Full Retirement Age
   If you delay your benefits beyond FRA, your monthly payment will increase by about 8% per year until you reach age 70. This can be a big help later in life. For example, if your benefit at 67 is $1,400, delaying until 70 could raise it to around $1,750 per month.
3. Work for at Least 35 Years
   Your benefit amount is based on your 35 highest-earning years. If you don’t have 35 years of work, the SSA will count some years as zero, which brings down your average. That’s why it’s smart to stay in the workforce a bit longer if you can.
4. Use the SSA’s Online Tools
   The Social Security website has calculators that can help you estimate your benefits and explore different retirement age options. These tools are free and easy to use.
5. Talk to a Financial Advisor
   If you’re unsure what to do, consider getting advice from a retirement planning expert. They can help you figure out the best strategy based on your health, savings, and long-term goals.

Is Early Retirement Ever a Good Idea?

Yes, in certain situations. For example, if you have a serious illness or a shorter life expectancy, it might make sense to take your Social Security benefits early. Some people may also have other sources of retirement income and don’t rely heavily on Social Security.

But for most people, waiting as long as possible is the best way to secure a more comfortable retirement.

Why This Matters Today

Healthcare costs are rising, and many retirees are living longer than ever before. That means your Social Security benefits need to last a long time. A 30% cut in your monthly payment might not seem like a huge deal at first, but over 20 or 30 years, it can add up to tens of thousands of dollars lost.

With so many people relying on Social Security as their main source of income, making the wrong decision now can lead to big financial struggles later.