Waiting until full retirement age to claim Social Security means you're able to collect your complete monthly benefit without a reduction. Full retirement age is 67 for anyone born in 1960 or later.
But Social Security makes benefits available to eligible recipients at a much earlier age. You can sign up for Social Security at any point once you turn 62. However, for each month you take benefits ahead of full retirement age, those payments are permanently reduced.
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Meanwhile, it's not so uncommon for people to work and collect Social Security at the same time. This is something the Social Security Administration allows seniors to do, and having a job could be a great way to supplement your monthly benefits.
Plus, even if you don't have a huge need for money, working in retirement has other perks. It can serve as a social outlet and a reason to get out of the house.
But if you claimed Social Security early and are now thinking about going back to work, you'll need to be careful. Though you're allowed to start working again, earning too much money could cause your Social Security checks to shrink in the near term.
You could risk losing out on Social Security temporarily
Once you reach full retirement age, earnings from a job won't impact your monthly Social Security benefits -- at least not negatively. It's possible that if you earn enough while on Social Security, you could become eligible for larger monthly benefits, depending on your wage history.
On the other hand, if you're receiving Social Security prior to full retirement age, you need to be careful with how much you earn. Exceeding the program's earning-test limit could result in having a portion (or, in some cases, all) of your Social Security benefits withheld.
In 2025, you'll have $1 in Social Security withheld per $2 you earn above $23,400. If you're reaching full retirement age this year, the rules are different, and you'll have $1 in Social Security withheld per $3 you earn above $62,160.
Withheld benefits for exceeding the earnings-test limit are not forfeited completely. Once full retirement age arrives, you should get that money back in the form of larger monthly checks. But if your goal in the context of working while on Social Security is to boost your income in the near term, you'll want to be careful about putting your benefits at risk.
Think carefully before claiming Social Security early
It's not always easy to predict what your need for money in retirement looks like until you get to that point. And it's also not so easy to figure out how long you want to keep working in some shape or form. But if you think there's a good chance you'll end up working until full retirement age, you may want to hold off on claiming Social Security until then.
Remember, when you take benefits early, the reduction you face is generally a permanent one. It's not the same as withheld benefits under the earnings test, which get repaid to you in time. Make sure you understand that distinction so you can make a smart decision in the context of your Social Security claim.
