Retirement Retirement Planning

The Social Security Rule That Matters Most Once You’re Within 3 Years of Retirement

Start thinking about your claiming age as early as now.

By Anna Armstrong , Edited by Calista Headrick

Updated April 9, 2026

Add Us On Google

If you're within three years of your retirement, it's a good idea to start thinking about your claiming age. The decision to retire early, wait until full retirement age (FRA), or delay retirement until 70 has a huge impact on your quality of life in retirement.

To avoid missteps, weigh your options as early as now. The good news? We'll help you do that by taking a thorough look at the claiming age rule.

Editor's note: All age and limit data comes from the Social Security Administration, unless otherwise stated.

Steal this billionaire wealth-building technique

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

A new company called Masterworks allows everyday investors to buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.

If you have at least $10k to invest, see what Masterworks has on offer. (Hurry, they often sell out!)

The claiming age rule that matters most

Workers can claim their Social Security benefits early (at 62), at full retirement age (typically at 67), or late (at 70). Your full retirement age is the baseline for calculating your benefits.

If you claim before your FRA, the Social Security Administration (SSA) reduces your benefit by 5/9 of 1% per month for the first 36 months and 5/12 of 1% for each extra month. While that sounds technical, what that really means is if you claim at 62, your benefit will be permanently reduced by about 30%.

If you claim late (at 70), you receive a permanent 8% increase in benefits for each year you wait.

Who really has the cheapest auto insurance in your area? Check your zip code here.

Why does claiming age matter now?

The final three years before retirement are a critical time — retirement planning shifts from long-term to near-term. The closer you get to 62, the more intense the pressure to make your decision becomes.

When you choose to claim your benefits impacts your monthly income post-retirement. This, in turn, determines your quality of life. It also plays a key role in whether you get to relax or return to the workplace to meet living expenses.

The costs and benefits of claiming early, waiting until FRA, and claiming late

The key to making the right decision is understanding the benefits and trade-offs of every claiming age.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

Claiming early

The biggest upside of claiming early is that you receive your benefits for a longer period. The trade-off is a lower monthly income for life. And, if you continue working, the SSA will reduce your benefits if you earn more than the annual earnings limit.

Claiming early may be beneficial if you need income immediately or if you have a shorter life expectancy. If neither is the case, waiting could result in a higher lifetime benefit.

Waiting until FRA

This is the sweet spot for many retirees. When you wait until FRA, you receive 100% of your benefits. Further, the SSA doesn't deduct your benefits if you choose to continue working.

The trade-off? You receive benefits for fewer years than you would if you claimed at 62, depending on how long you live.

Claiming at 70

The SSA awards an 8% annual benefit increase after FRA for late claims. So, waiting until 70 gives you the maximum possible monthly benefit.

As with waiting until FRA, however, you forgo Social Security income for several years. This could mean continuing to work or relying on your savings.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

The annual earnings limit

The current earnings limit, $24,480, can impact the size of your benefit if you claim early and continue to work. If you earn more than $24,480 in 2026, the SSA will deduct $1 from your benefit payments for every $2 you earn above the limit.

Usually, the limit changes in the year you reach FRA. For people who claimed early whose FRA is in 2026, the current limit is $65,160. The SSA will deduct $1 for every $3 earned above that amount for earnings before the month you reach full retirement age.

These reductions aren't permanent. Once you reach full retirement age, your benefit is recalculated to credit back the months when payments were withheld.

How to decide when to claim retirement benefits

While everyone's situation is different, consider your short-term income needs. If you foresee needing retirement income early, claiming at 62 might be a good idea. If your needs are long-term, waiting may be your best option.

Look at your expected lifespan and alternative income sources as well. If you have a short expected lifespan, perhaps due to health issues or family history, an early claim might be practical.

If you have alternative sources of income (like savings or pensions) or plan to continue working past 62, you could put off your claim to FRA or 70. This might be an especially great idea for earners who qualify for high benefits, as it lets them maximize their income potential.

Who to involve in your decision

Deciding when best to claim is no easy feat. You need to consider not only your expected benefits but also factors such as inflation and your current retirement portfolio. To help you make the right decision, involve a professional financial or retirement advisor.

If you're married, it's also important to involve your spouse. If you qualify for higher benefits than they do, delaying your claim could mean higher overall payments. Have a sit-down with your partner, preferably with an advisor as well, and weigh what claiming at different ages would mean for both of you.

Bottom line

While Social Security decisions may seem far off if you still have three, two, or even one year to retirement, they're not. When you choose to claim your benefits will impact the size of your payments and, consequently, your ability to navigate the cost of living post-retirement.

For a stress-free retirement, weigh your options before you hit 62. If you want to delay your claim until 67 or 70, start exploring ways to grow your savings and investments.

More from FinanceBuzz: