Social Security Decisions: Claiming Early, Trust Fund Projections, and COLA Updates

Deciding when to claim Social Security benefits remains one of the most critical financial choices for older Americans, with roughly 1 in 5 beneficiaries filing at age 62 according to Social Security Administration data. While claiming early provides immediate income during an affordability crisis, it results in up to a permanent 30% reduction in monthly payouts for those born after 1960, whose full retirement age is 67.

Financial advisors offer contrasting strategies regarding this milestone. Dave Ramsey suggests collecting benefits early and investing the checks if they are not needed for everyday expenses, though this approach requires strict discipline and carries market risk. Conversely, Suze Orman advocates waiting until age 70 for healthy retirees who can afford to delay, pointing out that a larger monthly check provides more dependable income later in life when personal savings may dwindle.

Research underscores the financial impact of waiting. A 2022 National Bureau of Economic Research study estimated that more than 90% of American workers aged 45 to 62 would benefit from delaying claims until age 70. Furthermore, Social Security provides delayed retirement credits of 8% for each year a worker waits beyond full retirement age, bringing the potential age-70 benefit to roughly 77% higher than an age-62 claim.

Beyond individual claiming strategies, the broader financial outlook for the federal program faces structural hurdles. According to the 2026 annual Social Security and Medicare Trustees Reports, the Old-Age and Survivors Insurance Trust Fund is projected to deplete its reserves in 2032. If Congress takes no legislative action before that time, incoming revenues would cover approximately 78% of scheduled retirement and survivor benefits.

The Trustees attribute the worsening long-term outlook to factors such as lower birth rates, lower immigration, and changes in federal tax law, including provisions from the One Big Beautiful Bill Act that are expected to reduce tax revenue on benefits. In contrast, the Disability Insurance Trust Fund remains fully funded through at least 2100, and the combined trust funds are projected to pay full benefits through the third quarter of 2034.

To help offset economic pressures, the Social Security Administration announced a 3.6% cost-of-living adjustment for 2027, which will raise average retired worker benefits by about $75 a month to $2,170 beginning in January. However, Medicare Part B premium increases—projected to rise from $202.90 to $209.50 a month in 2027—will continue to be deducted directly from monthly Social Security payments for participating enrollees.