3 Things to Know Before Filing for Social Security at 62

Key Points

• Starting Social Security at 62 can cut your monthly benefit by as much as 30%.

• If you keep working, the earnings test may reduce some of your payments.

• You may be able to reverse your decision later, but it is wise to choose your claiming age carefully from the start.

Filing for Social Security at 62 has one clear advantage: You can begin collecting checks sooner and receive the maximum number of payments over your lifetime. For some people, that extra income can make retirement possible or simply improve day-to-day finances.

Still, there are several myths and misunderstandings about claiming benefits as early as possible. Before you enroll for Social Security at 62, keep these three points in mind.

1. Your benefit can be permanently reduced

For most people, full retirement age is 67, which is when they become eligible for the full benefit earned through their work record. Claiming before that age triggers a reduction that can lower monthly checks by up to 30% when benefits begin at 62.

Early filing is not always the wrong choice. It may be the right move if you cannot manage your living expenses without the money, and it can also make sense for someone with a shorter life expectancy. Even so, for many people, starting at 62 means receiving less total Social Security income over time.

2. The earnings test may affect your payments

If you claim before full retirement age and still earn income from a job, the Social Security earnings test may withhold part of your benefits once your earnings pass a certain limit. In one recent year, the rule reduced benefits by $1 for every $2 earned above $24,480 for those under full retirement age all year. For people reaching full retirement age during that year, the reduction was $1 for every $3 earned above $65,160, and it applied only to income earned before the month of birth. Those thresholds are scheduled to rise to $25,560 and $67,920, respectively, in the following year.

The withheld money is not gone permanently. Your benefit is adjusted upward once you reach full retirement age to account for the amount that was held back. Even so, the earnings test can create short-term financial strain, so it is important to plan ahead if you want to start benefits at 62 while still working.

3. You can change course, but only under limited rules

The Social Security Administration allows you to withdraw your application within 12 months of filing if you decide you want to wait longer before claiming. But you can use this option only once, and you must repay every benefit paid to you and to anyone else collecting based on your record.

That makes this a difficult option to rely on, which is why choosing your starting age carefully is still the better approach. Before applying at 62, be sure you understand the trade-offs.