Many Americans consider taking Social Security benefits at 62, the earliest possible age, while continuing to work. Whether this is the best strategy depends on your personal situation. Here is what you need to know about claiming benefits at 62 while still employed.
The Rules for Collecting Social Security at Age 62
You can start receiving Social Security retirement benefits as early as age 62. However, your benefits will be permanently reduced compared to waiting until full retirement age (FRA), which is currently 66 or 67 depending on your birth year.
In 2023, the Social Security Administration imposes an early filing penalty of 30% for someone whose FRA is 67. So if your full monthly benefit at 67 is $1,000, your benefit at 62 would be cut to $700.
Even though your benefits are reduced, you are still allowed to work while collecting Social Security. However, your benefits may be temporarily withheld if you earn too much.
In 2023, if you are below your full retirement age for the entire year, $1 in benefits will be deducted for every $2 you earn above $21,240. The SSA will withhold benefits until the amount is fully offset.
For example, if you earn $41,240 at age 62 while claiming benefits, $10,000 is above the 2023 annual limit (($41,240 – $21,240) / 2). You would not receive Social Security payments for about 5 months to account for the $10,000 overage.
Things to Consider Before Claiming at 62
There are a few key factors to think about when deciding if claiming reduced retirement benefits at 62 while continuing to work makes sense:
- Your current income and financial needs – Can you afford to have benefits temporarily withheld due to the earnings test?
- Health and life expectancy – You receive benefits for a shorter period if you claim early
- Spousal benefits – Early filing can reduce spouse benefits if you are the higher earner
- Break-even analysis – The age when cumulative benefits from early vs. late filing are equal
Current Income and Financial Needs
If you claim Social Security at 62 while earning above the annual limits, you will not receive benefits for certain months. You need steady income without relying on those payments.
It can be hard to budget if your Social Security income is fluctuating or disappearing for parts of the year. Make sure you can cover your regular expenses using just your wages or other income sources.
Health and Life Expectancy
Claiming Social Security before your full retirement age results in permanently lowered monthly payments. However, you receive benefits for a longer period of time.
Breaking even requires living past the “break-even age” when the cumulative lifetime benefits are the same whether you filed at 62 or your FRA. The table below shows the break-even ages for different FRAs.
| Full Retirement Age | Break-Even Age |
| 66 | 78 |
| 67 | 79 |
If you have below-average life expectancy due to poor health or family history, you may come out ahead by claiming benefits as early as possible.
Spousal Benefits
Married couples need to consider how their filing decisions impact spousal and survivor benefits. If you claim early while working, you reduce the potential payments for your spouse.
The spousal benefit is up to 50% of the worker’s primary insurance amount (PIA), which is their benefit at full retirement age. By claiming at 62, you shrink the spousal benefit since your own PIA is decreased.
If you pass away before your spouse, they can receive 100% of your benefit or their own benefit, whichever is higher. So your early filing reduces their potential survivor benefit too.
Break-Even Analysis
A break-even analysis shows the age when total lifetime benefits received would be the same whether you filed for Social Security at 62 vs. your FRA. This varies based on your situation.
In general, the higher your earnings that extend past 62 and the longer you live, the later your break-even age will be. People with lower earnings or shorter lifespans often come out ahead by filing at 62.
Use an online calculator to determine your estimated break-even point based on your work history and filing choices.
Strategies to Maximize Benefits
Here are some strategies to consider if you want to claim Social Security benefits at 62 while continuing to work:
Minimize Earnings after Claiming
If you want to receive benefits all year long after filing at 62, keep your wages below the annual limit, which is $21,240 in 2023. You may restrict your hours or take seasonal work.
Each January, Social Security will send you a form to report your prior year’s earnings. Be sure to return the form promptly to avoid benefit issues.
Claim and Suspend
This strategy allows your spouse or dependent children to collect benefits on your work record while you delay taking payments.
File for benefits at 62 and then immediately request to suspend payments. This activates benefits for eligible family members but lets your own amount grow until you unsuspend at a later date.
Pay Back Benefits
If your income exceeds the earnings limit after claiming, you can avoid having monthly benefits withheld by repaying Social Security.
When you receive the earnings statement, you can send a personal check to refund benefits paid above the limit. This way your payments continue uninterrupted.
Switch to Spousal Benefits
If your spouse is already collecting Social Security, consider filing a restricted application for spousal benefits only at your FRA.
This allows you to receive spousal benefits while your own benefit earns delayed retirement credits. Then switch to your higher personal benefit later.
Conclusion
Claiming Social Security benefits at 62 while continuing to work is allowed but can have tradeoffs. Your benefits may be withheld if your income exceeds the annual limits.
Analyze your specific situation including earnings, expenses, health, and spousal benefits to determine if early filing makes sense. Use strategies like minimizing earnings or suspending benefits to optimize social security income.
Consulting with a financial advisor can provide guidance on integrating Social Security into your overall retirement plan.
