Many Americans rely on Social Security to stay financially afloat in retirement, and if you’ll be one of them, determining when you claim benefits is one of the most consequential financial decisions you’ll ever make.
While benefits can begin as early as age 62, monthly payments are permanently reduced until full retirement age — 67 for most retirees — and increase for each year you delay up to age 70. Still, there’s no single “right” age, and personal circumstances play a major role.
Learn More: The $1M Threshold That Explains Why Most Families Never Build Generational Wealth
For You: Start Growing Your Net Worth With Smarter Tracking
New data suggests that Gen X and baby boomers are taking sharply different approaches to that decision. A recent Northwestern Mutual study found that boomers are more likely than Gen Xers to claim Social Security as soon as they’re eligible (39% versus 27%). Gen Xers, by contrast, are more inclined to delay as long as possible (30% versus 21%).
So which strategy holds up better over time?
Why Many Gen Xers Plan To Delay Social Security Benefits
Among Gen X, only 27% plan to claim benefits early, while 43% plan to claim at full retirement age and 30% plan to wait as long as possible.
“For many Gen Xers, delaying benefits until their full retirement age, or even until age 70, is a mathematically sound strategy,” said Thomas J. Canale, partner and private wealth advisor at Summit & Sage Wealth Management and Insurance Solutions, a Northwestern Mutual Private Client Group.
Each year someone delays claiming past full retirement age, their benefit grows through delayed retirement credits.
“That guaranteed increase from delaying is one of the most effective ways to hedge against inflation and longevity risk,” Canale said.
However, this isn’t a one-size-fits-all strategy.
“While waiting maximizes the monthly check, ‘smart’ is subjective, and health is always the number one factor for all generations,” Canale said.
For many Gen Xers, deciding when to claim is less about strategy and more about cash flow.
“Gen X is often referred to as the ‘sandwich generation,’ balancing the costs of aging parents and children’s education,” Canale said. “Delaying requires having enough bridge assets to cover expenses in the interim. It’s a sophisticated move for those who can afford it, as it creates a larger, inflation-protected floor for their retirement income.”
Because of those trade-offs, Canale stresses that Social Security decisions should be coordinated with a broader financial plan.
“Every American has unique goals, worries and dreams, so we all deserve a plan that’s custom-built for our life,” he said.
Why Claiming Social Security Early Can Cost Boomers Long-Term
Although it’s tempting to claim Social Security as soon as you are eligible, the long-term financial impact can be significant.
“Over a 20- or 30-year retirement, that can add up to hundreds of thousands of dollars in lost cumulative income,” Canale said.
Longevity risk only magnifies that trade-off.
“Our study shows that nearly half of Americans fear outliving their savings,” Canale said. “By locking in a lower Social Security payment early, boomers may inadvertently increase the pressure on their personal investment portfolios to perform later in life. If the market takes a downturn when they are in their 80s, they have a much smaller guaranteed income floor to fall back on.”
That said, early claiming isn’t always a mistake — it can be a deliberate planning choice.
“Unlike personal life insurance proceeds, you cannot pass down unused Social Security benefits to your heirs,” Canale said. “Some clients choose to claim early and use that income to fund a second-to-die life insurance policy. Because premiums are significantly lower at age 62 than at 70, they can create a guaranteed, tax-free inheritance for their family while using their other savings to supplement any monthly shortfall.”
When Claiming Social Security at 62 Makes Sense
In certain situations, claiming early is sometimes the best strategy for boomers and Gen X alike.
“There are a few very practical reasons to claim at 62,” Canale said. “First and foremost is health and life expectancy. As mortality sets in, if you have health concerns or a family history that suggests a shorter life expectancy, claiming early ensures you receive the benefits you’ve paid into.”
Early claiming can also be critical for families caring for a dependent with special needs.
“If you have an unmarried dependent with special needs, they may be eligible to receive up to 50% of the parent’s benefit,” Canale said. “For these families, commencing early can provide immediate, essential support for their child’s care and long-term security.”
Quality of life is another key consideration.
“If a client is in a high-stress job and claiming Social Security early allows them to retire and improve their quality of life now, that is a ‘win’ that doesn’t show up on a spreadsheet,” Canale said.
Which Generation Has the Better Approach?
Canale doesn’t believe one generation’s strategy is inherently superior.
“Rather, they are responding to different economic and family realities,” he said. “Gen X is witnessing the ‘retirement wave’ and feels the pressure of a higher ‘magic number,’ leading them toward a more defensive, wait-and-maximize approach. Boomers, however, are often making a choice that prioritizes legacy or immediate peace of mind.”
Whether it’s using benefits to fund life insurance for the next generation or securing support for a child with special needs, the savvy move is the one that aligns with your specific family dynamics, Canale noted.
“The best approach isn’t a generation-wide rule — it’s the one that aligns with your personal health, your family’s needs and your total financial picture,” he said. “Regardless of your situation, you should work with a financial advisor to create a plan that aligns with your goals and needs.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
