1. Claiming Before Full Retirement Age Without a Mathematical Foundation

One of the most devastating financial wounds retirees inflict upon themselves involves claiming benefits the moment they turn 62. The Social Security Administration defines your Full Retirement Age (FRA) based on your birth year. For anyone born in 1960 or later, full retirement age is exactly 67. The system allows you to claim retirement benefits as early as 62, but doing so comes with a severe, permanent penalty.

If you claim benefits at 62 when your full retirement age is 67, your monthly check is reduced by 30 percent. This reduction does not disappear once you reach full retirement age; it is a permanent haircut to your baseline income. Conversely, for every month you delay claiming past your FRA up to age 70, your benefit increases through delayed retirement credits. Waiting until 70 yields a benefit that is 124 percent of your baseline FRA amount.

The difference between claiming at 62 and claiming at 70 represents a 77 percent increase in your baseline monthly income. While it makes sense for individuals with severe health issues or nonexistent savings to claim early, healthy retirees who claim at 62 simply to get their hands on the money often regret the decision later in life when inflation diminishes their purchasing power.