Can You Collect Social Security at 62 and Still Work?
What Is the Social Security Administration?
The Social Security Administration (SSA) is an independent government agency that administers Social Security. It is an insurance program that consists of retirement, disability and survivor benefits. In order to qualify for these benefits most workers pay into the system through Social Security taxes.
The head offices of the Social Security agency are located in Woodlawn, Maryland and are referred to as the Central Office. There are tens of thousands of workers employed by the Social Security agency and it is the largest government program in the United States.
It is estimated that by the end of the 2022 fiscal year the agency will have paid out $1.2 trillion in benefits to 66 million citizens and legal residents of the United States. An additional $61 billion is expected in SSI benefits and $7.5 million to low-income individuals.
This government agency is a vital part of the country's economy and without it millions of already struggling Americans would have nothing. It is a program that many have paid into for decades in preparation for retirement and as an insurance policy against sudden disability.
History of the Social Security Agency
On August 14th 1935, President Franklin D. Roosevelt signed the Social Security Act into law as part of his New Deal initiative. This led to the creation of the Social Security Board (SSB), a presidentially appointed group of three executives tasked with overseeing the Social Security program.
With zero budget, staff or even furniture the SSB finally obtained funding from the Federal Emergency Relief Administration. It was on October 14th 1936 that the first Social Security office opened its doors in Austin, Texas.
In January of 1937 Social Security taxes were first collected. Just a few years later the first Social Security check was issued to Ida Mary Fuller of Battleboro, Vermont. Ida’s check was dated January 31st 1940 and she received $22.54.
The SSB in 1939 merged with the U.S. Public Health Service, the Civilian Conservation Corp and other government agencies to become the Federal Security Agency. In 1846 under President Harry S. Truman the SSB was named the Social Security Administration SSA.
In 1953 the Federal Security Agency was dismantled and the SSA was placed under the banner of the Department of Health, Education and Welfare. Finally in 1994 President Bill Clinton made the Social Security Administration an independent body once again.
What Is the Full Retirement Age?
In order to answer the question of if you can collect Social Security at 62 and continue to work we should first clarify what full retirement means. Full retirement is the age at which you can start to receive your full benefits without suffering any reductions.
Those who retire earlier than full retirement age will actually have a smaller monthly payment as a result. A percentage will be removed from your payment amount for every month early you take your benefits. That said Americans can retire as early as the age of 62 for Social Security purposes but full retirement age can vary based on when you were born.
The full retirement age in the United States is actually being decreased so although right now it stands at 66 - 67 for those born between 1954 – 1960 it is now going to be 67 years of age for those born after 1960. Individuals who are about to turn 62 in 2023 will be at full retirement age when they turn 67. There are however some who would push for a raise to 68 years old for retirement.
How Much Can You Earn While Claiming Social Security?
The Social Security Administration is understanding when it comes to working while claiming benefits but they do place restrictions. When it comes to maximum earning limits while receiving retirement benefits it is age dependent.
Those who are over 62 years old but under 70 are considered under full retirement age. These individuals while claiming Social Security in 2023 can earn up to $21,240. Every two dollars earned above this amount will see one dollar subtracted from your Social Security benefits.
People who are about to reach full retirement age are allowed to earn more during the part of the year prior to their 67th birthday. This works out by the Social Security Administration only removing one dollar for each three dollars earned over the limit. In 2023 the maximum earnings limit for those who are about to reach full retirement age is $56,520 a year.
Once an individual reaches the age of 70 all earnings caps are removed. This means they can earn their full benefits and as much other income as they so wish.
Tax Implications of Working While on Social Security
Potential earning penalties aside there are other issues that can make earning too much extra income above the allowed limit problematic. Just like any income, Social Security benefits could be considered taxable.
Depending on how much you are earning in Social Security benefits you may or may not have to pay taxes on that income. If the income falls below the taxable limits then you do not have to pay income tax at all.
Once you start earning extra income not only will you be taxed on what you earn from the job but you may also push your Social Security into the limits whereby you will have to pay taxes on that income as well.
Potentially then you might find yourself in a situation where you are earning too much income from the workforce, decreasing your benefits and additionally increasing your tax liability. This is why it is important to take care how much extra you work.
The whole point of working while on Social Security is to maximize your overall earnings. This might be a delicate balancing act to ensure you do not end up losing most of your hard earned work income to taxes or penalties of your Social Security benefits.
How Does Working After Retirement Affect Your Social Security Benefits?
Working beyond retirement age is becoming more and more common as the years go by. This is because the average Social Security recipient earns around $1,543 a month. Anyone who has to rent or has a mortgage will instantly see that most of this could be spent on keeping the roof over their heads and paying a few utilities.
Basically speaking, Social Security payments for most Americans do not even reach the Federal poverty limit. As a result Social Security beneficiaries may apply for their benefits but stay on at their jobs. Others may struggle through for a while before having to reenter the workforce at least part time.
As mentioned the Social Security Administration fully understands this might be necessary so they have no issues with retirees returning to work if they have to. There are limits however and exceeding limits can cause you problems.
Those who took early retirement between ages 62 – 67 for example are only allowed to earn a maximum of $21,240 a year before penalties come into effect. If you exceed this limit you will lose $1 for every $2 you exceed the annual earnings limit.
If for example you earned $100 above the annual limit you would lose $50 from your annual Social Security benefits. It is therefore may or may not be worth exceeding the annual limit.
In the months of the year prior to you turning 67 your earnings limit increases to $56,520. So if your birthday is in July then from January to June of that year you can earn this higher amount without penalties from Social Security. It should be noted however that you lose $1 for every $3 you earn over the maximum amount.
As soon as you turn 70 years of age however all of these limits are lifted and you can earn as much as you like. There will be no penalties against your Social Security benefits and you claim the full amount along with whatever you earn from your job.
It should be noted that if you wish to work on until the age of 70 you may improve your eventual Social Security benefits.
Is It Worth Working on Social Security?
Everyone’s personal circumstances are different and the amount of money they need to live a comfortable life is different. You can try and live frugally and perhaps the Social Security benefits will be enough but even then maybe not.
The Social Security Administration gives generous limits when it comes to potentially adding to retirement income. If you balance the earnings well and avoid over earning and even with additional taxes you may well benefit from continuing to work.
Some individuals may even like the idea of remaining in the workplace as a way to stay active and social. Financially speaking there is no doubt that when done correctly you will have more money and hopefully enough to keep you comfortable.
When it comes to earning while on disability benefits this might be a different set of circumstances. The mere act of being able to earn while receiving disability benefits flies in the face of the reason you are getting that benefit.
Exceeding earning limits of disability could result in you losing benefits and being denied for these programs in the future. It is often hard to even receive disability benefits in the first place and there are certainly those who do so fraudulently. As such the government is very strict when it comes to additional earnings and working while on disability then may not be worth the risk.
So Can You Still Work When You Take Social Security at Age 62?
The answer is definitely yes, of course you can continue to work even if you take early retirement at 62. There are some pitfalls to this however. Firstly you will permanently decrease your future Social Security benefits by taking retirement before the full 70 years of age.
There are generous allowances for potential earnings over your Social Security benefits which change as you get closer to and then beyond full retirement age. You may also receive small penalties for earning above the limits and also end up paying higher income taxes on the additional earnings.
If you balance work and your Social Security benefits correctly you can take your Social Security benefits early and possibly cut back your working hours while still maintaining or even increasing your annual income. It is completely acceptable to continue to work and take Social Security at the age of 62.
Reference SSA Locator
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"Can You Collect Social Security at 62 and Still Work?". SSA Locator. Accessed on November 29, 2023. https://ssalocator.com/blog/can-you-collect-social-security-at-62-and-still-work/.
"Can You Collect Social Security at 62 and Still Work?". SSA Locator, https://ssalocator.com/blog/can-you-collect-social-security-at-62-and-still-work/. Accessed 29 November, 2023
Can You Collect Social Security at 62 and Still Work?. SSA Locator. Retrieved from https://ssalocator.com/blog/can-you-collect-social-security-at-62-and-still-work/.