Retirement Retirement Planning

Laid Off Near Retirement? 7 Reasons You Shouldn't Rush to Claim Social Security

A job loss late in life can be stressful, but claiming Social Security too early may create long-term financial tradeoffs.

By Adam Palasciano

Edited by Laura Hohenstein

Updated Dec. 2, 2025

Being laid off as you're planning for retirement can feel overwhelming, especially when your income suddenly disappears. Many older workers may be tempted to claim Social Security right away to replace lost earnings, but rushing into that decision can permanently reduce benefits. Before locking in a lower monthly payment, it's worth stepping back to evaluate your options, your finances, and your long-term needs. In many cases, patience can lead to a far stronger retirement outlook.

Here are several reasons to slow down before claiming Social Security after a late-career job loss.

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You haven't reached full retirement age yet

Your claiming age has one of the biggest impacts on your monthly benefit. The Social Security Administration (SSA) allows you to file as early as age 62, but doing so permanently reduces your monthly benefit by up to 30% if your full retirement age (FRA) is 67.

Waiting until FRA unlocks 100% of your benefit, and waiting until age 70 increases your monthly payment by roughly 8% per year you delay. Over a retirement that could span 20 to 30 years, that additional income can make a substantial difference.

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You're eligible for a significant severance package

If your employer offers a severance package, that payout can help bridge the gap between jobs without tapping Social Security. A lump sum or extended salary continuation can be used to cover living costs, health insurance premiums, or debt payments.

This breathing room gives your future Social Security benefit more time to grow. It also allows you to make decisions based on long-term strategy rather than short-term panic.

You're eligible for unemployment insurance benefits

Unemployment insurance (UI) benefits vary by state, but they can function as a temporary income stream while you regroup. UI can help cover essential expenses while you job hunt or explore alternatives, reducing the pressure to claim early.

It's important to note that UI payments don't count as earnings in the eyes of the SSA and will not reduce your Social Security benefit. However, income from Social Security could reduce your UI benefits, another reason to delay collecting your benefits. Using UI first can preserve years of higher lifelong payments.

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You're not ready to call it quits at work

Job loss does not always mean permanent retirement. Older workers may reenter the workforce, whether in a similar field, a new industry, or part-time roles that offer flexibility.

Continuing to work increases your income today, but it can also strengthen your long-term Social Security benefit by adding higher-earning years to your calculation. Even part-time income can help delay claiming as your benefit grows.

You have retirement savings to use before collecting SS benefits

Tapping a portion of your retirement savings may help you delay filing without jeopardizing your financial stability. Withdrawals from a 401(k) or IRA can fill the income gap temporarily, especially if markets are favorable or your savings are robust.

Using a planned withdrawal strategy may reduce the need to claim early and lock in a reduced benefit. The goal is to stretch your resources in a way that maximizes long-term income security.

You want to avoid the earnings test

If you claim Social Security before your FRA and then go back to work, the earnings test may temporarily reduce your benefits. In 2025, the SSA deducts $1 in benefits for every $2 earned above $23,400 if you're under FRA for the entire year.

This reduction is temporary, but it can create cash-flow challenges while you're trying to rebuild. Waiting to claim allows you to avoid this rule entirely and keep more of what you earn.

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You may live longer than you expect

Longevity is a major factor in Social Security planning. If you expect to live into your late 80s or 90s, delaying benefits can greatly increase your lifetime benefit total.

A larger check becomes especially important in your later years, when healthcare and long-term care costs tend to rise. Delaying can help ensure your benefit keeps pace with long-term financial demands.

Bottom line

Losing a job close to retirement age can be stressful, but it does not mean you must claim Social Security immediately. Evaluating your severance options, unemployment benefits, earnings potential, and savings can buy you time to let your monthly benefit grow, improving your financial foundation for the decades ahead.

Delaying Social Security, even by a year or two, may significantly increase your lifelong income and help you maximize your senior benefits. Before making any decisions, take a step back, assess your full financial picture, and choose the path that sets you up for lasting security.

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