Filing for Social Security at 62 instead of 67 reduces monthly benefits by 30%, a costly mistake for laid-off workers unaware of the rules.
A 64-year-old worker’s decision to claim Social Security early after a layoff could cost tens of thousands in lifetime benefits. The error stems from confusion between early retirement and early filing, which permanently reduces monthly payments by roughly 30% if claimed at 62 instead of full retirement age (67).
Many laid-off workers mistakenly believe severance or unemployment forces early filing, but Social Security rules allow delaying claims regardless of employment status. The 30% penalty for early filing is distinct from the 35-year averaging formula used to calculate benefits, further complicating decisions.
With late-career layoffs rising, workers in their early 60s are particularly vulnerable to this misconception, often unaware they have options to bridge income gaps without sacrificing long-term benefits.