More Americans claim Social Security early
When your 401k account has taken a beating, the size of your Social Security benefit is a key determinant of your standard of living. But, according to a story in the Los Angeles Times, a lot of Americans are voluntarily cutting the size of their Social Security benefit.
They’re doing so by collecting benefits early, beginning at age 62. Early-retirement claims are up 25 percent this year, and many of those early retirees are actually layoff victims who need Social Security to make ends meet. In other words, they didn’t choose early retirement, it chose them. And this comes just as both poll data and scholarly research say that people need to retire later, not earlier.
For individuals forced to make this choice, the long-term consequences will be severe. The L.A. Times includes this quote from Cristina Martin Firvida, director of economic security for AARP:
When the recession ends and the economy bounces back, there may be a band of people for whom things will never be the same again. They’ll still be paying the price for 10, 20, 30 years down the road.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
Claiming that people are “voluntarily cutting the size of their Social Security benefit” by taking it earlier is a classic example of a half-truth. The other half — which makes it a smart move for most people to take their benefits early, is that doing so either allows them to (a) invest the proceeds or (b) refrain from having to liquidate other investments. (These are really two versions of the same thing, since money is fungible.)
Social Security is really an”immediate payment” annuity — and a particularly valuable one because the benefits are indexed to inflation. How many rational people would spend $100,000 or more for an annuity that would not start making payments to them until 4 or more years in the future, with the provision that their heirs would get nothing from it if they died in the meantime? That’s how Social Security works.
Working past the age of 62 to accumulate savings outside of Social Security is fine for anybody and necessary for most people. But if you retire voluntarily or involuntarily, the sooner that you start taking Social Security benefits, the better.