You've paid into Social Security your entire career, and next year, you'll finally have a chance to get some of that money back. You'll be turning 62, which is the earliest age you can apply for Social Security retirement or spousal benefits. You don't have to sign up right away, though.
Before making that call, ensure you understand the three points listed below. They could save you a lot of frustration and lost benefits.
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1. Claiming at 62 will reduce your monthly benefits
The Social Security Administration allows you to claim retirement or spousal benefits at 62, but it considers this early claiming. Early claiming brings a penalty that could shrink your checks by up to 30% for retirement benefits or 35% for spousal benefits.
To avoid this, you must delay your Social Security application until you reach your full retirement age (FRA). This is 67 if you were born in 1960 or later.
Basically, every month you delay benefits reduces the early claiming penalty a little until you reach your FRA and qualify for the full monthly benefit you've earned based on your work history. Those claiming retirement benefits also have the option to continue delaying their application to earn delayed retirement credits. These grow your checks by 2/3 of 1% per month, or 8% per year, until you turn 70.
This doesn't mean that claiming Social Security at 62 is always the wrong call. It could give you your largest lifetime benefit if you have a short life expectancy. Or it might be your only option if you're unable to work and have limited personal savings to fall back on. But if neither of these things applies, you may get a bigger lifetime benefit by delaying your application until your FRA or beyond.
2. You could further shrink your checks if you're working and claiming Social Security at the same time
The Social Security earnings test is a little-known rule that affects those claiming Social Security benefits before their FRA while continuing to work. If you earn more than a certain amount from your job, the Social Security Administration will withhold money from your checks for the remainder of the year.
In 2026, you'll lose $1 for every $2 you earn over $24,480 if you're under your FRA all year. This could result in you losing your entire check, depending on the size of your Social Security benefit and your earnings from your job.
The money isn't lost forever. When you reach your FRA, the Social Security Administration will increase your benefit to account for what it withheld previously. But that might be little comfort in the short term when you're counting on your Social Security benefits to pay your bills.
If you think you may encounter the earnings test, you could try to reduce your hours so you earn less from your job. Or you may need to work more to make up for what the Social Security Administration keeps from you. Alternatively, if you don't need your checks, you could delay Social Security, either until you retire or you reach your FRA.
3. You may not be eligible for benefits in your birth month
You must be 62 for the entire month to be eligible for Social Security benefits in that month. The Social Security Administration defines this in an odd way. If you were born on the first or second of a month, then the month you turn 62 is your first month of eligibility. If you were born on any other day of the month, you'll have to wait until the month after your birth month.
For example, if you were born on March 2, you can claim March benefits. But if you were born on March 3, your first Social Security benefit will be the April benefit, which the Social Security Administration pays out in May.
It's important to consider this when planning your budget for next year. You need to make sure you have enough income from other sources on hand to cover your bills until your first Social Security check arrives.
Remember, you can sign up for Social Security benefits up to four months before you hope to receive checks. It's best to apply in advance, in case there are difficulties processing your application.
If any of these things surprised you, that doesn't mean you shouldn't claim Social Security at 62. It just means you may need to develop a strategy for addressing these hurdles before applying. However, it doesn't hurt to evaluate all potential claiming ages, just to ensure you're not missing out on an opportunity to maximize your lifetime benefit.
