Taking Social Security at 62 While You’re Still Employed: What to Expect

You can begin collecting Social Security as soon as you reach 62, even if you remain on the job. But receiving benefits while still earning wages can come with a catch, including the possibility that part of your monthly payment will be withheld if you have income from work.

For some people, filing early makes sense. Still, it is important to understand the full impact before making such an important financial choice.

Income limits to know

If you start Social Security before full retirement age and continue earning a salary, some of your benefits may be held back. That does not mean the money is gone for good. The withheld amount is typically adjusted into later Social Security payments once you reach full retirement age.

In 2027, withholding begins once your earnings go above $25,560, not counting your Social Security benefit. After that point, $1 is withheld for every $2 earned. In the year you are nearing full retirement age, the threshold rises to $67,920, and then $1 is withheld for every $3 in excess earnings.

For example, if a 63-year-old earns $35,560 in 2027, that is $10,000 above the lower limit, so $5,000 would be withheld from Social Security benefits. For many people in their early 60s, that can mean several monthly checks being delayed.

That reduction can be a serious issue for people living close to the edge financially and relying on Social Security to cover everyday expenses. It can also come as an unpleasant surprise for higher earners who are still living paycheck to paycheck.

How the withheld money is recovered

Once you reach full retirement age, the withheld amount is eventually credited back. At that stage, Social Security increases your monthly benefit to make up for the months that were withheld, and that higher payment continues for life. The earnings test no longer applies after you reach full retirement age, even if you keep working.

In the long run, having some benefits withheld can still work out well if it does not interfere with your ability to pay your bills. For many people, it can make sense to accept a raise, work longer hours, or take on side work while drawing Social Security instead of letting the withholding rules discourage extra income during the final years of a career.

Should you claim early?

For someone still earning wages, waiting to claim Social Security is often the better option. Depending on your income, much of your benefit could be withheld. In addition, your future monthly payments will continue growing while you delay filing. Even so, claiming early can still be the right move for some households. The best choice depends on your personal circumstances.

If you do decide to file early, it is wise to tell the Social Security Administration what you expect to earn. Doing so can help you avoid an overpayment notice later.