Many Americans approaching retirement age wonder if they can start collecting Social Security benefits at age 62 while continuing to work. The short answer is yes, you can collect Social Security Income (SSI) at age 62 and still work, but your benefits will be reduced if you earn over certain income limits.
Can You Collect Social Security at Age 62?
Yes, you can start collecting Social Security retirement benefits as early as age 62. However, your benefit amount will be permanently reduced compared to waiting until your full retirement age (FRA), which is currently 66 or 67 depending on your birth year.
Specifically, claiming SSI at 62 results in a permanent 25-30% reduction in your monthly benefit amount compared to waiting until your FRA. The reduction is based on the number of months between when you claim and when you reach FRA.
Early Filing Penalties
If your FRA is 66, filing at age 62 causes a 25% reduction in your monthly benefit.
If your FRA is 67, claiming at 62 results in a 30% benefit cut.
This reduction is permanent – it does not go away once you reach FRA. Your benefit is set at the reduced level for the rest of your retirement.
Can You Work and Collect Social Security at 62?
Yes, you can work and collect Social Security retirement benefits starting at age 62. However, your benefits will be reduced if you earn over the annual earnings limit set by the SSA.
In 2023, the annual earnings limit for someone under full retirement age is $21,240. For every $2 you earn over this limit, $1 is withheld from your Social Security benefits. This is known as the retirement earnings test.
The Retirement Earnings Test
– If you claim SSI at 62, the retirement earnings test applies until you reach your full retirement age.
– In 2023, the limit is $21,240 ($1,770 per month).
– For every $2 over the limit, $1 in benefits is withheld.
– In the year you reach FRA, a higher limit applies ($56,520 in 2023).
– Once you reach FRA, there is no limit on earnings.
Let’s look at some examples to see how the retirement earnings test affects benefits:
Example 1
John claims Social Security at age 62 in 2023. His FRA is 66.
John earns $30,000 from work in 2023.
This is $8,760 over the earnings limit ($30,000 – $21,240).
For every $2 over the limit, $1 in benefits is withheld.
$8,760 / 2 = $4,380.
So John’s benefits are reduced by $4,380 due to excess earnings.
Example 2
Jane claims Social Security at 62 in 2023. Her FRA is 66.
Jane earns $15,000 from work in 2023.
This is under the $21,240 earnings limit.
Jane’s benefits are NOT reduced due to excess earnings.
Any benefits that are withheld are not truly “lost” – your benefit amount is recalculated at FRA to account for the withheld benefits and increased.
Other Benefit Reductions
In addition to early filing reductions and the earnings test, there are a few other ways your Social Security benefits can be reduced further if you claim at 62 while working:
Taxation of Benefits
If your combined income (including wages and SSI) exceeds certain thresholds, up to 85% of your Social Security benefits become subject to federal income tax. Claiming benefits while earning a high salary can result in heavily taxed benefits.
The Windfall Elimination Provision (WEP)
If you have a pension from a job where you did not pay Social Security taxes and qualify for retirement benefits through a different job where you did pay Social Security taxes, the WEP can reduce your benefit amount.
Government Pension Offset (GPO)
If you receive a pension from a federal, state, or local government job where you did not pay Social Security taxes, the GPO provision can reduce your Social Security spousal or survivor benefits by up to 2/3.
Making the Decision on When to Claim
As you can see, collecting Social Security benefits at 62 while continuing to work can get complicated quickly due to benefit reductions.
Here are some tips that can help guide your claiming decision:
- Calculate your age 62 and FRA benefit amounts using the SSA retirement estimator to see the difference in monthly income
- Consider how working will impact your benefits via the earnings test and taxation
- Determine if WEP or GPO will apply to you
- Project your total retirement income including SSI to decide if waiting until FRA results in more lifetime income
- Understand how spousal and survivor benefits could be impacted if you claim early while working
- Seek help from a financial advisor if you are unsure about the best age to claim
While collecting SSI at 62 while working is possible, it can seriously reduce your monthly benefit amount. Waiting until FRA or beyond to claim may result in higher lifetime retirement income.
Frequently Asked Questions
Can I work full time and collect Social Security at 62?
Yes, you can work full time and claim Social Security benefits as early as age 62. However, if you earn over the annual earnings limit ($21,240 in 2023) your benefits will be reduced $1 for every $2 you earn over the limit through the retirement earnings test. Once you reach full retirement age, there is no penalty or limit on your earnings.
What happens if I earn too much while collecting Social Security at 62?
If you earn over the annual earnings limit ($21,240 in 2023) between ages 62 and your full retirement age, your benefits will be reduced by $1 for every $2 you earn over the limit through the retirement earnings test. These benefits are not truly lost – your benefit amount will be recalculated and increased at your full retirement age.
Can my spouse work full time if I claim SSI at 62?
Yes, your spouse can work full time at any age while you claim Social Security retirement benefits. Their earnings will not affect your Social Security income. However, their earnings could impact the taxation of your benefits or reduction in any spousal/survivor benefits you receive.
Does Social Security know how much I earn if I work while claiming?
Yes, the SSA tracks your earnings over the course of each year by receiving data from the IRS and your W-2 forms. They will know if you earn over the annual earnings limit and will automatically withhold benefits as applicable per the retirement earnings test. It is crucial to report all of your earnings accurately.
What if I only work part time while collecting Social Security at 62?
If you work part time and earn under the annual earnings limit (e.g. earning $10,000 per year), you can collect your full Social Security benefit with no reduction. Part-time earnings will only start to reduce your benefits if they exceed the annual limit set by the SSA.
The Bottom Line
Claiming Social Security early at age 62 and continuing to work is possible, but can substantially reduce your monthly retirement benefit depending on your total earnings. Before claiming, thoroughly understand how income from working can impact your benefits through early filing reductions, the earnings test, taxation of benefits, WEP, and GPO. For many retirees, waiting until their Full Retirement Age or even later to claim may result in higher total lifetime retirement income.