Claiming Social Security at 62 instead of 67 reduces monthly benefits by 30% permanently.
Early claimants who work lose $1 in benefits for every $2 earned above $22,320 in 2026.
Healthcare spending rose 6.9% through November 2025 while the 2026 COLA is 2.5%.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
If you were born in 1960 or later, your full retirement age for Social Security is now 67. That might not sound like breaking news, but the way this rule interacts with the 2.5% COLA adjustment for 2026 and the new $22,320 earnings limit creates real financial consequences for people who claim benefits without understanding the timing.
Many retirees still think of 65 as the magic retirement age, or assume 62 is close enough. Claiming at 62 instead of waiting until 67 permanently reduces your monthly benefit by roughly 30%. On a $2,000 monthly benefit, that is $600 less every month for the rest of your life. Over 20 years, that is $144,000 you never recover.
If you claim before your full retirement age and continue working, you lose $1 in benefits for every $2 you earn above $22,320 in 2026. This still trips up people who assume they can claim early and keep working without penalty.
Say you claim at 63, receive $1,400 per month, and earn $40,000 from part-time work. You are $17,680 over the limit, which means Social Security withholds $8,840 in benefits, wiping out more than six months of payments. The money is not gone forever—Social Security recalculates your benefit at full retirement age to account for withheld months—but in the meantime, you are getting less income than you planned for.
The 2.5% COLA for 2026 applies to your actual benefit amount. If you claimed early and locked in a permanently reduced benefit, that 2.5% increase applies to the smaller number. Someone receiving $1,400 per month gets a $35 raise. Someone who waited and receives $2,000 per month gets $50. That gap compounds every year.
Inflation has been running at 1.82% based on Core PCE data through November 2025, meaning the COLA is slightly above the Fed’s preferred inflation measure. But healthcare spending grew 6.9% from January to November 2025, and that is the category that hits retirees hardest. A 2.5% benefit increase does not keep pace with medical costs if healthcare takes a meaningful share of your budget.
If you are approaching 62 and considering claiming early, run the math on your specific situation. If you plan to keep working, the earnings limit will reduce your benefit more than you expect. If you have other income or savings to draw from, waiting until 67 delivers a 30% larger benefit for life, and every future COLA applies to that higher base.
The hardest mistake to undo is claiming too early without understanding the permanent reduction. Once you start benefits, you cannot reclaim them at full retirement age except in very limited circumstances. Decisions made now shape your income for the next 20 or 30 years.
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.
