There’s been a spike in claims for Social Security — and fear may be one of the reasons why.
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Pending claims for retirement, survivor and health insurance benefits jumped 16% in March to 580,887 from 500,527 a year earlier, according to an operational report from the Social Security Administration (SSA).
Agency officials said that “fear mongering has driven people to claim benefits earlier” at a March 28 meeting that can be viewed on YouTube.
Many Americans were already anxious about the long-term stability of Social Security. But leadership changes, staff cuts, office closures, debate and theories about privatization and alarming disinformation about widespread fraud are possibly creating a perfect storm of anxiety for many Americans.
The Trump administration changes and claims of fraud are "leading people to make decisions based on fear,” Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, told The Wall Street Journal.
Why Americans are worried about Social Security
While President Donald Trump has repeatedly said he won’t cut Social Security benefits, fear is driving some Americans to claim their benefit earlier than planned — even if it means reducing their overall retirement income.
Dan Hietpas, 64, told the Journal he was planning to claim Social Security at age 67 to maximize his benefit. But he’s taking it early due to concerns about benefit cuts and “chaos” at the agency. Christine Banner, 65, told the Journal she originally intended to file in about two years, but filed this year because she and her husband worry Trump’s allegations of fraud could be used to justify benefit cuts or service disruptions. "The couple hopes that if they are already receiving benefits, they won’t face any future reductions," said the report.
Officials at the meeting also mentioned an increase in field office visits, calls to the agency and website traffic.
More visitors are paying the SSA $100 for certified copies of earnings records. Hietpas and his wife, Jill, printed out their earnings records “in case their data disappears or becomes inaccurate.”
“Typical year earnings statements is something we would not generally discuss about visitors coming to see us … They’re afraid of our systems going down. That’s what they’re telling us,” said an official. He also mentioned people coming in for ID proofing “because they’re afraid.”
This is amid an environment of confusion created by the Department of Government Efficiency (DOGE), with its mandate to cut waste and reduce fraud.
Earlier this year, DOGE under Elon Musk made leadership changes at the SSA, shuttered two departments, and reduced staff from 57,000 to 50,000 — though the agency was already chronically understaffed.
Recently there have been reports of longer wait times for callers and website outages.
DOGE also announced it was reducing 10 regional offices down to four and, on its website, listed federal real estate leases linked with 47 field offices that it is seeking to cancel, reported AP. The new SSA administration has since denied claims of field office closures, but Nancy Altman at Social Security Works told ThinkAdvisorthe statement was “splitting hairs” and “deceptive.”
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There were also plans to scrap some services offered over the phone, but those plans were abandoned after panic ensued.
Amid this overhaul, some lawmakers like Sen. Bernie Sanders began to worry the Trump administration is setting the stage to privatize Social Security. BlackRock CEO Larry Fink suggested letting Americans invest part of their Social Security funds.
However, there is another great existential issue facing the program. Social Security is expected to run short of funds by 2035, which means it would only be able to pay 83% of benefits, according to the Trustees of the Social Security and Medicare trust funds report.
The cost of claiming early
Retirees may claim Social Security earlier than planned for any number of reasons, such as the loss of a job or a deteriorating health condition. At the same time, baby boomers in America are reaching “peak 65,” which means more than 4.1 million will turn 65 each year through 2027, potentially contributing to a surge in new claims.
But workers tend to claim benefits sooner when Social Security’s finances are referenced negatively in the news, according to a 2021 study by the Center for Retirement Research at Boston College.
Americans might also be worried about withdrawing from their nest egg while markets are plunging and economic uncertainty hangs in the air.
The drawback of claiming Social Security early, however, is that you would miss out on a larger monthly benefit over the long run. While you can claim your benefit as early as age 62, the longer you wait, the bigger your monthly check.
For example, you’ll take a reduced amount until you reach your full retirement age (FRA) as defined by the SSA, which is typically between 66 and 67 years of age. If you take your benefit at age 62, you could see a reduction in your benefit by as much as 30% (since it’s being stretched over a longer period of time).
If you delay your benefit past full retirement age, your monthly check will increase as much as 8% a year until age 70. Those increases stop at age 70.
Still, it doesn’t hurt to shore up your finances, especially in times of economic uncertainty. That might mean building an emergency fund, paying off any high-interest debt and saving more aggressively.
It could be a good time to sit down with your financial advisor to ensure your portfolio is well diversified and has the right asset allocation for you; you may want to explore options beyond stocks and bonds or invest in alternative assets such as real estate or precious metals.
While the future is unpredictable, most financial experts advise against making rash decisions with your finances based on fear — and that includes your Social Security benefit.
It may be worth sitting down with your advisor or even a financial counselor before making a major financial decision that could impact your retirement permanently.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
