2 Hidden Problems With Claiming Social Security at 62

Key Points

• Age 62 is the earliest age to sign up for Social Security.

• If you file at that point, you could face a 30% reduction in your benefits compared with waiting until full retirement age.

• There are some other less obvious consequences that might ensue if you sign up for Social Security at 62.

• The $23,760 Social Security bonus most retirees completely overlook ›

There's a reason so many people rush to sign up for Social Security at age 62. That's the earliest point in life to take benefits, and it's very hard to say no to money that's available to you immediately.

But there's also a reason so many financial experts tell seniors to proceed with caution when claiming Social Security at 62. If you file that early, you'll reduce your monthly benefits by about 30% compared with waiting until age 67, which is full retirement age for anyone born in 1960 or later.

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If you don't have much in the way of retirement savings, cutting your own Social Security benefits by 30% could be problematic. But that's not the only issue with claiming Social Security at 62. Here are two other big problems that might ensue.

1. You could reduce your spouse's survivor benefits

When you're single, you only have to consider your own needs and goals when deciding when to claim Social Security. But it's very different when you're married. And if you have a spouse who's younger than you and earned a lot less than you, it's very important to be mindful of Social Security survivor benefits.

If you pass away first, your spouse will be eligible for a monthly survivor benefit from Social Security that's equal to 100% of the benefit you collected while you were alive. If you file for Social Security at 62, not only will you shrink your own monthly benefit by about 30%, but you'll also leave your surviving spouse with that much less money.

Of course, if you have a giant life insurance policy or aren't worried about your spouse's finances because your spouse is in line for a huge inheritance, then this may not be an issue. Otherwise, talk things through with your spouse, as well as a financial advisor, to make sure claiming benefits early isn't a huge mistake.

2. You could lose money if you're still working

There's no rule stating that you can't work while collecting Social Security. But if you have not yet reached full retirement age and are working while on Social Security, you'll be subject to an earnings test. Under that earnings test, you could end up having some of your Social Security income withheld if you make too much money.

The earnings-test limits for Social Security change every year. In 2025, you'll have $1 withheld per $2 in earnings above $23,400 if you're 62 and are claiming Social Security this year.

The money you have withheld from your Social Security checks won't be lost forever. Once full retirement age arrives, it'll be repaid to you in the form of larger monthly checks.

But if you're going to be earning money from a job, it may not pay to claim Social Security early. And if you decide to work as a means of keeping busy more so than because of a need for money, you want to try to keep your income under the earnings-test limit to avoid losing out on some of your Social Security check.

Most people are fully aware that claiming Social Security at 62 will result in smaller monthly benefits for life. But you may not have realized that filing that early could also shrink your spouse's survivor benefits and result in having some of your Social Security withheld if you're still working. It's important to consider these factors as well if either applies to you.

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