Turning on Social Security can feel like a simple decision. You reach 62, you're eligible, so why not start collecting? For some retirees, claiming early may make sense. But starting Social Security before you fully understand the consequences can create some unwelcome surprises.
Here are 4 reasons to think twice before turning it on.
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1. You Could Lock In a Smaller Benefit
You can start Social Security as early as age 62, but claiming before Full Retirement Age permanently reduces your monthly benefit.
And there's another side to the equation: waiting can significantly increase your benefit.
Delaying Social Security beyond 62e earns 7-8% in delayed retirement credits for each full year you wait, up to age 70. That means someone with a Full Retirement Age of 67 could potentially receive 24% more by waiting until 70, before cost-of-living adjustments.
The decision isn't simply whether you want the money now. It's whether you want a smaller benefit for life or a larger guaranteed benefit later.
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2. Going Back to Work Could Reduce Your Benefits
What if you start Social Security and then decide you're not ready to stop working?
If you're under Full Retirement Age and earn more than the annual earnings limit, some of your benefits can be withheld. In 2026, that limit is $24,480 for someone under Full Retirement Age for the entire year.
You may be able to recover some of the withheld value later, but the immediate impact on your income can be an unwelcome surprise.
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3. You Could Trigger Higher Medicare Premiums
This is one many retirees don't see coming.
Higher income can trigger IRMAA, which means higher Medicare Part B and Part D premiums.
And here's the kicker: Medicare generally looks at your income from two years earlier.
So a decision you make today could mean higher Medicare premiums two years from now.
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4. It Can Affect Your Spouse
Social Security isn't just an individual decision when you're married.
Your claiming strategy can affect your spouse's benefits, particularly when it comes to survivor benefits.
The higher-earning spouse's decision can be especially important because the surviving spouse may ultimately depend on that benefit.
Don't just ask, "When should I claim?" Ask, "When should we claim?"
The Bigger Question
The question isn't simply:
"Can I start Social Security?"
It's:
"What happens if I start Social Security now?"
What happens to your taxes? What happens to Medicare? What happens if you go back to work? What happens to your spouse? What happens to your future income?
At Rose Street Advisors, we use sophisticated planning technology to help retirees model different Social Security strategies and see how each decision could affect their overall retirement plan.
Before you turn on Social Security, make sure you understand what else you're turning on.
Contact Rose Street Advisors to see how Social Security fits into your retirement plan.