The Double Whammy Retirees Who Claim Social Security at 62 Face
You may want to think twice before taking benefits as early as possible.
Retirees who claim Social Security at 62 face a double whammy situation, with their benefits being reduced and potentially withheld due to earnings. Full retirement age is 67 for those born in 1960 or later. For each month benefits are taken before this age, payments shrink by around 30%. However, claiming early also subjects retirees to an earnings test if they continue working.
In 2026, if earning above $24,480, $1 in benefits will be withheld for every $2 earned over this limit. This limit increases to $25,560 in 2027. While benefits withheld under the earnings test are not lost forever and Social Security recalculates and pays more once full retirement age is reached, the near-term impact could result in a small Social Security check if filing at 62, working, and exceeding the earnings limit.
Passive income and retirement account withdrawals don't count towards the earnings test. While claiming Social Security at 62 might not always be a poor choice, it is worth reconsidering if intending to continue working and earning significant income.
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