We received some interesting news recently, with the revelation that the number of people claiming early social security at age 62 is dropping. In 2009, 30.8% of all eligible Americans who could claim Social Security at age 62 did so. Just two years later, the change was eye-opening: by 2011 that number had dropped to 26.9%, which is a lower number than in any other year since 1976.
Are fewer people claiming early by choice or out of necessity? Many informed observers speculate that this trend is due partly to the improving economy, but also because more folks are delaying claiming for strategic financial planning reasons (which is an approach that makes sense for many people, and something I have preached many times in this space). While this could be a positive sign for the economy and an indicator that people are getting smarter with their Social Security decision-making, it is also likely an indicator that people are both working longer and retiring later. Since January 2002 the number of senior workers has increased from 4.2 million to 7.2 million workers, a 70% increase. If you combine that with the fact that the Social Security earnings test acts as a natural deterrent to claiming early (because $1 in benefits is withheld for every $2 earned over $14,640) and it’s easy to see how and why people might be more likely to wait until after full retirement age—when there is no earnings test—to claim their Social Security benefits.