I can’t tell you the number of people who plug 62, 66 or 67 into the first draft of their retirement plan as when they plan to retire. When I probe further, I confirm that it is because it aligns with one of the ages shown on the green Social Security statements that come in the mail. Those ages just show minimum benefits, maximum benefits and what is known as your primary insurance amount. The reality is that you can claim any time in between that minimum and maximum age.
My first piece of advice, assuming you have saved enough: Separate the retirement decision from the Social Security decision.
When can you collect?
The earliest Social Security claiming age for all Americans is 62. If you are a surviving spouse or a surviving ex-spouse, you can claim it as early as age 60, so long as you’re eligible. Both come with significant penalties. Social Security reduces benefits by a percentage every month. The actual calculation is beyond the scope of this article, but to simplify it, if you collect at 62, you get about 70% of what you would be entitled to at 67.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here’s the major reason not to collect Social Security while you’re working: the Social Security earnings limit. This is essentially an income amount, beyond which Social Security will start to withhold your Social Security income. Let’s say you turn 62 in 2024: The Social Security Administration will withhold $1 in benefits for every $2 in earnings above an annual income of $22,320.
A lot of numbers there, but essentially, if you are entitled to $2,000 per month at 62 and earn over $70,000, you’ll have your entire benefit withheld. This is not Social Security just taking the money; the agency is simply recalculating your benefits. Once again, oversimplifying, if this happened every year until age 67, you’d get just about the same amount had you waited to claim your benefits. In other words, it’s a big waste of time to claim the benefits.
In the months leading up to your birthday of the year you hit full retirement age (FRA), that earnings limit goes up to $59,520. E.g. The Senior Citizens’ Freedom to Work Act, passed in 2000, eliminated the earnings cap once you actually hit FRA. So, if you continue to work all the way until 70 but turn on your benefits at age 67, you won’t be penalized.
Claiming early can be the right choice for you
There are scenarios, such as poor health, having the lower benefit amount in a couple and a pure need for the income, that make claiming Social Security early the right choice. However, if you do want to continue to work, you should know that Social Security is likely to withhold benefits. Unfortunately, if they miss it on their end, they will not accept blame and let you slide. Rather, they’ll send you a bill.
This decision should be part of a bigger plan that incorporates all sources of income, investments, taxes and, most important, your goals. It should not be driven by someone telling you at the watercooler that “Social Security is going broke.”
Related Content
- When Is the Right Time to File for Social Security?
- How the Social Security Bridge Strategy Works
- Social Security Optimization If You Save More Than $250,000
- The Five Critical Components of a Financial Plan for Retirees
- Three Legit Reasons to Break Up With Your Financial Adviser (and How to Do It)
-
Retirement Health Care Costs Are On the Rise: What You Need to KnowA 65-year-old retiree will face significantly higher lifetime health care costs than they would have a year ago, even with Medicare. Here are the surprising totals.
-
Virginia Tax-Free Weekend 2025 Is Here August 1–3: What to KnowSales Tax Three days, no sales tax. Here’s what qualifies for Virginia’s tax-free weekend.
-
You Don't Have to Be Wealthy to Need a Wealth ManagerNavigating complex financial decisions is hard on your own, no matter how much money you have. A wealth manager can provide comprehensive financial planning, investment management, risk management and more.
-
Despite Tariffs, These Investment Experts Are Bullish on European EquitiesEuropean equities were one of the better-performing investments during the first half of 2025. They could be a good long-term prospect for U.S. investors needing to diversify, according to these investment managers.
-
How Do You Know You Are Ready for a Gray Divorce? 15 Yes-or-No QuestionsAs people 50 and older get more gray divorces, many splits are initiated by women who want a new path. Answer these 15 questions to see if you might need to think about how you should move forward.
-
'Buy Now, Pay Later' for Everyday Spending? This Financial Pro Thinks It's Risky'Buy Now, Pay Later' apps can get you out of a jam when you need money quickly. But using them regularly for small purchases could create problems.
-
Five Things to Consider Before Rolling Your 401(k) into a Roth IRAConverting at least some of an old 401(k) to a Roth IRA can offer long-term tax benefits and retirement flexibility, especially if you anticipate being in a higher tax bracket later or wish to leave a tax-free legacy.
-
From Dream Apartment to Nightmare: When Your Landlord Evicts You Through No Fault of Your OwnThis is what I suggested a tenant do to get out of her lease after her landlord's inexperience and lack of action made her rental situation unsafe. It's a legal situation called 'constructive eviction.'
-
Six Steps to Being Empowered and On Track: An Expert Financial Guide for WomenWhile most female investors feel on track with their financial goals and empowered by managing their investments, many regret not starting sooner. Here's how you can get started and take control of your financial future.
-
Selling Your Business? This Powerful Insurance Option Unlocks Multigenerational WealthPrivate placement life insurance (PPLI) offers almost unbelievable investment flexibility, estate planning and tax advantages. And it's completely legit.
