Social Security earnings limit when retiring at 62? Confused about early retirement penalty

Hey there, I went through this exact scenario last year. For claiming at 62 when your FRA is 67, your benefit gets reduced by about 30% permanently. The earnings limit for 2025 is $22,320 (they adjust it every year with COLA). Yes, you'll lose $1 in benefits for every $2 you earn above that limit. The good news is that once you reach your full retirement age, those withheld benefits aren't completely lost! SSA recalculates your benefit amount to give credit for the months they withheld benefits. It's complicated but essentially you get it back gradually over your lifetime. My advice: really crunch the numbers. I underestimated how much the part-time work would affect my benefits, and it created some cash flow problems for me.

The reduction at 62 is actually closer to 30-35% (depending on your exact FRA) and it's PERMANENT. A lot of ppl don't realize that. And don't forget Medicare doesn't start til 65 so you'll need health insurance for those years. One option: keep working full-time until FRA if possible. The reduction goes down each year you delay - at 63 it's less of a cut than 62, and so on.

my sister claimed at 62 and works at walmart part time. they took back some of her ss checks when she worked extra during holidays. its a real pain cuz you have to watch your income every month!!

To give you precise information: 1. For someone born in 1963 with an FRA of 67, claiming at 62 results in a 30% permanent reduction to your Primary Insurance Amount (PIA). 2. The 2025 earnings limit for those under FRA is $22,320. This is the annual limit, not monthly. 3. For earnings above that limit, SSA withholds $1 in benefits for every $2 earned. 4. Once you reach FRA, the earnings limit disappears completely - you can earn any amount without reduction. 5. The benefits withheld due to excess earnings aren't permanently lost. When you reach FRA, SSA recalculates your reduction factor to account for months where benefits were completely withheld, essentially giving you credit that slightly increases your ongoing monthly benefit. If your daughter's college expenses are temporary, consider whether you could manage without claiming early by using savings for these short-term needs rather than accepting a permanent reduction.

Has anyone actually tried reaching the Social Security office to discuss their specific situation? I spent THREE DAYS trying to get through on the phone when I needed to figure this out, constantly getting disconnected or waiting for hours. So frustrating!

Thanks for all this info everyone! Quick follow-up question - does the earnings limit include things like investment income or just employment wages?

The whole early retirement penalty system is RIDICULOUS!!! Why should we be PUNISHED for accessing OUR OWN MONEY that we've paid into the system for DECADES?? And then they further punish us if we try to supplement with part-time work! The whole system needs to be overhauled. The politicians don't care about us at all!

I forgot to mention in my original response - if you're still supporting your daughter, have you looked into whether she might qualify for benefits on your record while she's in college? The rules changed years ago, but if she has a disability that began before age 22, she might qualify for benefits when you start collecting.

My friend's husband died last year and she got survivors benefits at 60 without any earnings test! why is that different from retirement?

When I had to figure out my strategy, I made a spreadsheet comparing different scenarios. Have you run the numbers for: 1) Claim at 62 + part-time work, 2) Work full-time until 63 or 64 then claim, and 3) Work until FRA? Each year you delay claiming increases your benefit by about 7-8%. It's really a math problem specific to your situation.