The Double Whammy Retirees Who Claim Social Security at 62 Face

If someone were to offer you the option to start getting monthly checks now versus in the future, would you be inclined to wait if holding off meant receiving larger payments? Maybe you'd sit tight. Or maybe you'd take the money immediately because you just plain want it now.

Such is the dilemma all Social Security claimants face. You can file for Social Security as early as age 62. But for each month you take benefits ahead of full retirement age, your payments shrink.

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Social Security's full retirement age is 67 for anyone born in 1960 or later. If you file for benefits at 62, your monthly checks will shrink by about 30% for life.

But that's not the only problem with claiming Social Security at 62. There's another issue you might face that could make you regret an early claim.

You'll be limited in what you can earn

If you claim Social Security before full retirement age and continue to work, you'll be subject to what's known as an earnings test. And exceeding its limit could mean having a portion of your Social Security checks withheld or, in some cases, your entire check held back.

The Social Security earnings test limits change from year to year. In 2026, if you're 62 collecting Social Security, you'll have $1 in benefits withheld per $2 of earnings above $24,480.

In 2027, that limit will increase. Next year, you'll have $1 in Social Security withheld per $2 of earnings above $25,560 if you're 62.

But either way, you face a true double whammy situation. Your benefits will decrease by about 30% if you claim them at 62, and you might then have some or all of those benefits withheld anyway for making too much money.

Now, to be clear, benefits that are withheld under Social Security's earnings test are not lost forever. Once you do reach full retirement age, the Social Security Administration will recalculate your benefits and pay you more money each month to make up for what it withheld earlier.

But in the near term, you could end up with a very small Social Security check if you file at 62, work, and exceed the earnings test limit. So you may want to reconsider such an early claim if you intend to continue receiving a job-related paycheck.

Social Security's earnings test only applies to earned wages. Passive income, such as dividends or interest payments, doesn't count, nor do withdrawals from a retirement account.

So it's not like you can't collect any income on top of your Social Security benefits. You just can't earn more than a certain amount from a job before running into issues with withheld benefits.

When claiming 62 is and isn't a good idea

Even though filing for Social Security at 62 results in reduced benefits, it's not automatically a poor choice for everyone. If you have significant health issues and do not expect to live such a long life, filing at 62 could actually put more Social Security in your pocket in total despite having benefits reduced on a monthly basis.

You might also want to claim Social Security at 62 if taking it sooner lets you achieve lifelong goals, and you've saved enough to cover the hit to your monthly benefits. A major trip abroad, for example, may not be possible without Social Security. If you're in shape to take that journey at 62 but don't want to risk falling out of shape by full retirement age, then an early claim could make sense.

But if you expect Social Security to be your primary source of retirement income, you risk a long-term shortfall if you file for benefits at 62. And if you expect to live a longer-than-average lifespan, an early claim could result in a smaller lifetime benefit.

Also, if you intend to keep working and expect to earn a considerable amount of money, you may want to hold off on claiming Social Security at 62. That way, you can avoid the aforementioned double whammy situation and set yourself up with larger monthly checks for life.

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