The Hidden Cost of Claiming Social Security Too Early
For many University of Rochester professionals, Social Security forms the foundation of retirement income. The question is not whether you will receive it, but when you should claim it.
At first glance, the decision can feel straightforward. Claim at 62 and checks begin right away. Wait until 67 or even 70, and the monthly benefit is larger.
What often gets overlooked is that the cost of claiming early goes beyond a smaller check. The timing of your Social Security affects your taxes, your withdrawals, and the long-term health of your portfolio.
The Obvious Cost: A Smaller Monthly Benefit
Claiming Social Security at 62 can reduce your benefit by roughly 25 to 30 percent compared to your full retirement age. That reduction is permanent.
Over a retirement that may last 25 or 30 years, a smaller monthly check can add up to tens, or even hundreds, of thousands of dollars in lost income.
Most people understand this part.
What is less obvious is what that smaller benefit sets in motion.
The Hidden Cost: Taxes and Portfolio Pressure
Here is what many people never fully connect.
When your Social Security benefit is smaller, you need to make up the difference somewhere else.
That usually means larger withdrawals from your 403(b) or IRA.
Those larger withdrawals increase taxable income.
As taxable income rises, a greater portion of your Social Security benefit can become taxable as well.
Over time, this creates a quiet cycle.
Higher withdrawals lead to higher taxes, which then require even more withdrawals.
The result is a retirement plan that can feel tighter and more fragile than expected, even when markets cooperate.
Why Coordination Matters
Choosing when to claim Social Security is not just about selecting an age. It is about how that decision fits into the rest of your retirement income plan.
A coordinated approach can help you:
Reduce how much you need to withdraw from your 403(b) or IRA
Lower overall taxable income
Keep more of your Social Security benefit out of the taxable range
Protect long-term savings from unnecessary strain
Without a plan, people often claim early to relieve short-term pressure, only to create long-term challenges. With a plan, Social Security timing becomes part of a broader strategy rather than a standalone decision.
Why Guidance Helps as You Approach Retirement
If you have saved consistently throughout your career at the University of Rochester, you have already done much of the heavy lifting. The next phase is turning those savings into reliable income that supports your life, not just your expenses.
A fiduciary advisor can help you:
Determine the claiming age that fits your situation
Coordinate Social Security with 403(b) and IRA withdrawals
Understand when the Rule of 55 may apply
Use Roth conversions to reduce future taxes
Manage income to avoid unnecessary IRMAA surcharges
The goal is clarity. This is a decision that affects the rest of your life, and it deserves thoughtful planning.
Final Thought
You spent decades saving. Retirement is about spending wisely and keeping more of what you worked hard to build.
Social Security timing influences far more than your monthly check. It shapes your taxes, your withdrawal strategy, and your financial confidence for years to come.
If you are a University of Rochester professional nearing retirement, now is the time to design a Social Security strategy that fits into a complete income plan.
Learn more about my Social Security Timing approach
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The Pitti Group Wealth Management, LLC (“The Pitti Group”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where The Pitti Group and its representatives are properly licensed or exempt from licensure.