What Happens to Your Social Security Benefits If You Continue Working After 62?

Deciding when to start taking Social Security benefits is a big step in retirement planning. One common question many people have is: "What happens to my Social Security benefits if I keep working after I start collecting them at age 62?" It’s a great question—and an important one to understand before making any decisions.

Let’s break it down.

You Can Start Benefits at 62—But There's a Catch

Age 62 is the earliest you can begin receiving Social Security retirement benefits. However, it's also considered early retirement. If you start collecting at this age and continue working, your benefits may be temporarily reduced if your earnings exceed certain limits.

How the Earnings Limit Works

In 2025, if you're under your full retirement age (which is between 66 and 67, depending on your birth year), and you continue working after starting Social Security, the Social Security Administration (SSA) applies an earnings limit.

Here’s how it works:

• If you're under full retirement age, $1 in benefits is withheld for every $2 you earn above the annual limit.

• For 2025, that limit is $22,320.

Example:If you earn $30,000 in 2025 and start collecting Social Security at 62, you're $7,680 over the limit. That means $3,840 of your benefits would be withheld for the year.

In the year you reach full retirement age, a different limit applies, and the withholding amount becomes more favorable: $1 in benefits is withheld for every $3 you earn over a higher limit. Once you reach full retirement age, the earnings limit no longer applies at all.

But Don’t Worry—It’s Not Lost Forever

Here’s the good news: The benefits that are withheld due to your earnings aren’t gone for good. Once you reach full retirement age, the SSA recalculates your benefit amount to give you credit for the months when your benefits were withheld. So you’ll receive a slightly higher monthly benefit going forward.

Working Could Also Increase Your Future Benefits

Another advantage of continuing to work is that Social Security benefits are based on your highest 35 years of earnings. If you’re still working and earning more than you did in some of your earlier years, those higher earnings could replace lower-earning years in the calculation—and increase your benefit permanently.

Should You Take Benefits at 62 If You’re Still Working?

It depends on your situation. If you:

• Need the income right away, taking benefits at 62 might make sense, even if there’s a temporary reduction.

• Have other income sources and can afford to wait, you might consider delaying benefits to receive a higher monthly amount later.

• Plan to work and earn a higher income, the reduction might be steep enough to consider postponing benefits until full retirement age.

This decision is personal and should take into account your overall financial picture, health, goals, and other income sources.

Final Thoughts

Social Security is just one piece of the retirement puzzle, and understanding how working affects your benefits is key to making informed choices. If you have questions about how this applies to your situation, be sure to reach out to your financial advisor. They can help walk through the numbers, consider the timing, and ensure your retirement strategy aligns with your goals.