Social Security is an indispensable part of the economic security of tens of millions of beneficiaries. Politicians of every stripe seem to outdo themselves promising to protect and defend Social Security benefits. For decades the program was referred to as “the third rail of American politics” – touch Social Security and you die.
So, if all that is true, why are so many beneficiaries worried about the future of Social Security? A glance at recent headlines, coupled with an understanding of how the program works, answers that question. For years, experts have warned that the trust fund undergirding benefits is eroding, so much so that payments will likely be trimmed by 20 percent or more in the next 8-10 years unless Congress acts. Couple that worry with the image of Elon Musk wielding his DOGE chainsaw and its easy to see why folks are anxious.
In a recent Wall Street Journal article, reporter Anne Tergesen explains how those fears about Social Security are coming to light. (Please note that a subscription may be required to access the article.) The number of beneficiaries claiming Social Security payments at the earliest legal age – 62 – is on the rise. According to the Wall Street Journal, this bump in early filing is often directly related to anxiety about the program.
Get what you can now, the argument goes, because Social Security may not be around in its present state much longer. Are these fears well-grounded? We’ll take a look at Tergesen’s report to find out.
Anxiety Often Drives the Decision to Take Early Benefits
Tergesen writes, “Worries about Social Security’s future are causing Americans to claim benefits earlier than planned.” She explains that recent changes being advocated by those within the Trump administration, along with persistent (and unproven) claims of fraud, are causing people to make what the Wall Street Journal calls “fear-based financial decisions.”
According to the article, there’s proof of this rise in early claims. “Increased website traffic, field office visits, and calls reflect Americans’ unease about Social Security,” Tergesen writes. “Americans anxious about the future of Social Security are claiming their benefits earlier than planned, even though it can mean less income over the rest of their lives.”
Staff Cuts and Rule Changes Add to the Unease
As Tergesen explains, “The Social Security Administration has been shedding staff and changing requirements for claiming benefits over the phone. President Trump has been pushing to cut government spending, though he has vowed not to reduce benefits.”
In recent weeks we’ve written multiple articles for the Blog about the turmoil at Social Security, including this one just a few weeks ago.
Statistics Show a Marked Increase in Filing for Benefits
The Wall Street Journal article gives some figures to back up the claim that anxiety is triggering a boost in enrollment. The report states that pending claims for retirement, survivor and health insurance benefits totaled 580,887 in March, up from 500,527 a year earlier. That’s a 16 percent boost year over year.
“While multiple factors likely contributed to the increase,” says Tergesen, “agency officials said at a March 28 meeting that ‘fearmongering has driven people to claim benefits earlier.’”
“Sweeping Changes” in Federal Agencies Stoke SS Fears
The first 100 days under President Trump have brought an unprecedented blizzard of changes to government programs, and, says Tergesen, the dust has yet to settle.
“Many effects of the Trump administration’s swift and sweeping changes to federal agencies aren’t yet apparent,” she writes, “but with Social Security, they are already changing households’ financial decisions. Americans have long been anxious about Social Security’s stability, and Trump’s second term is heightening those anxieties.”
Tergesen spoke with one expert, Kathleen Romig of the Center on Budget and Policy Priorities, who says anxiety is the reason for the rise in claims. “That is leading people to make decisions based on fear,” Romig states.
Fear of Disruption Prompts One Couple’s Decision
Tergesen’s Wall Street Journal article cites several real-life examples of people whose choices to file early stemmed from fears about Social Security’s viability. One such couple is Christine and Clint Banner of North Carolina.
Christine, now 65, had planned to wait two more years to file for Social Security benefits. Instead, she’s filing this year. Her benefit of $1,633 is $130 per month less than she would have received had she waited until age 67.
According to the Banners, President Trump’s claims of widespread fraud in Social Security made the couple nervous. They began to worry that the fraud allegations could be used to justify cuts or delays in benefits. But allegations of fraud appear overblown, says Tergesen. “The Social Security agency has estimated that improper payments represented 0.3 percent of total benefits,” she writes.
Claiming Early Benefits Means a Permanent Cut in Payments
There are important reasons to delay claiming Social Security benefits, says Tergesen. “Economists and financial advisers generally discourage claiming early,” she writes. “Benefits increase with each month someone waits to take them beyond the minimum claiming age of 62. The increases stop at age 70.”
The average increase per year from age 62 until age 70 is about 8 percent, compounded. This means that benefits starting at 70 are 76 percent higher than at 62, according to Laurence Kotlikoff, Social Security expert and Boston University economist. A person who postpones benefits until 70 instead of 62 would come out ahead if they live to at least 80, he said.
White House Denies that Fear is a Factor in Early Filings
Tergesen says that President Trump’s administration is denying the link between increased anxiety and increased Social Security traffic. “Liz Huston, a White House spokeswoman, cited other causes for the increase in claims in March,” Tergesen writes, “including aging baby boomers claiming benefits and a new law that raises benefits for some government retirees.”
Huston stated, “There is no confusion. President Trump has been extremely clear: he promised to protect and strengthen Social Security.”
Nevertheless, as the Wall Street Journal points out, normal patterns don’t seem to explain the heightened level of activity. “Calls to the agency since the beginning of October are up 19 percent compared with the same period a year earlier, officials said at the meeting. Website traffic and field office calls are higher as well, they said.”
Acting Social Security commissioner Leland Dudek was quoted as saying, “I think we have a lot of customers that, right now, a lot of Americans that are very uneasy.”
Surveys Show a Heightened Level of Fear About Social Security
Tergesen writes that recent surveys reflect the concern Dudek alludes to. “More than 75 percent of U.S. adults worry a great deal or a fair amount about Social Security, a 13-year high, according to a March Gallup poll,” she writes, with Democrats expressing greater concern than Republicans.
Negative media stories also have a notable impact on people’s financial behavior. “When Social Security’s finances are referenced negatively in the news,” says the Wall Street Journal, “workers tend to report a desire to claim benefits earlier, according to a 2021 study by the Center for Retirement Research at Boston College.”
As noted above, some of these fears are not new. As the population ages, Social Security’s finances have come under pressure. “Unless Congress shores up the retirement program,” says Tergesen, “it is projected to deplete its reserves in 2033, which would trigger a 21 percent reduction in benefits.”
Some are Worried About Security of Personal Data
Tergesen notes that security of online data also has some people fearful. One financial planner told Tergesen that she has received “an uptick in questions lately from people concerned about Social Security cuts, even among people already receiving benefits. Some asked about the safety of personal data.”
In response, Social Security has emphasized that personal data is secure and the agency has backups. “Social Security officials said at the meeting that many Americans are visiting field offices for help accessing their accounts on the agency’s website,” Tergesen reports. “Some are paying the agency $100 for certified copies of their earnings records, on which benefits are based.”
Rajiv’s Response: Better Planning is the Cure for Fear
We asked Rajiv Nagaich to comment briefly on this important article. As you might expect, he urges people not to give in to their fears about the future.
“Look,” he says, “I understand that these are emotionally charged times. Right now, there’s a lot of noise in the air over issues like Social Security. The important thing is not to lose your head and make a hasty decision you might very likely come to regret.”
Rajiv says there are three things to bear in mind. “First,” he says, “Social Security is not going to disappear. Yes, a benefit cut is possible – but there are plenty of ways for Congress to fix the problem. Don’t listen to people who tell you Social Security is going away.”
But the second point is just as important, says Rajiv. “Social Security should be just a part of your financial picture going forward. I tell all my clients to work with a financial planner to get a customized financial dashboard in place. Your dashboard let’s you look into the future and make the right decisions, no matter what happens. Even if Social Security benefits are reduced, you’ll have the tools in place to make the right adjustments.”
Rajiv’s final point: keep your wits about you. “Don’t give in to fear! People will try to stoke your worries and get you to make unwise choices based on anxiety. As the poet said, if you can keep your head when those about you are losing theirs, you’ll be in the best possible shape. Let us help you put a plan together that will keep those fears at bay.”
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(originally reported at www.wsj.com)