Should I Claim Social Security Early?
When it comes to filing and when to claim Social Security, timing matters. In this video, we break down the facts around full retirement age, early Social Security benefits, and the long-term impact of claiming at 62 versus waiting until 67.
For those born in 1960 or later, full retirement age is 67, as defined by the Social Security Administration. Filing before that age could result in a permanent reduction of possibly up to 30%. We also explain how the Social Security earnings test works, including the 2026 income threshold of $24,480 and how benefit withholding is calculated for those who continue working.
Takeaways:
- Full retirement age is 67 for those born in 1960 or later.
- Filing to claim social security at 62 can reduce benefits by as much as 30% permanently.
- The Social Security earnings test applies before full retirement age.
- In 2026, benefits could be reduced $1 for every $2 earned over $24,480, if you claim early.
- Once you reach full retirement age, you can work and collect benefits without penalty.
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Should I Claim Social Security Early – Transcript
There’s lots of misinformation and misunderstandings when it comes to taking Social Security early …or filing for Social Security early.
Or what they call “before the full retirement age.”
So let’s start right there.
The full retirement age as defined by Social Security Administration is 67 for people who were born in 1960 and moving forward.
If you were born prior to 1960, your full retirement age is 66 – plus a couple of months, depending on the actual date of birth.
But taking early social security or filing before your full retirement age is a decision that you really shouldn’t take very lightly.
It’s a big decision.
You really should be working with your financial planner and seeing if it’s the right decision for you.
Don’t misunderstand, there’s no right or wrong answer when it comes to this decision.
Everyone’s circumstances are different. But there ARE some things that you need to know.
The first thing you need to know is that if you start before your full retirement age, your social security benefit will be on a permanent reduction.
It’s a permanent discount that – like the word permanent implies – it lasts forever.
So it’s a big decision.
The second thing that you need to know if you’re going to file before your full retirement age is:
if you decide to start taking Social Security at the earliest possible date, which is age 62….
that discount can be as much as 30%. It’s big.
It’s a big discount.
The third thing you need to know is if you continue to work… AND take social security benefits, you are going to be subject to what’s called an “earnings test,” every single year between the ages of 62, when you could possibly start and your full retirement age.
So what do we talk, what do we mean, when we’re talking about an earnings test?
What social security has determined is if you earn more than $24,480 in 2026, Social Security will withhold $1 of benefits for every $2 you earn over that amount, $24,480.
Now that $24,480 number, that’s a moving target.
It’s going to change in the future.
But understand right now, if you are bringing in a paycheck and you’re earning more than that, you’re going to be subject to this earnings test.
Say you’re 62, you’ve decided that you’re going to file for Social security, but you have a job where you’re earning $75,000 a year.
You know that your social security benefit would be – under normal circumstances – would be $3,000 a month.
But with a 30% discount… now you’re looking at $2,100 a month.
So when you do that math, that’s $25,200 per year.
That’s going to be added on top of your income.
Here’s the problem though.
When you go through the earnings test, here’s how the math is going to work.
Your $75,000 you’re bringing in; less the threshold, the 24,480
…leaves you in excess of $50,000.
So you are way over the threshold for social security and their earnings test.
When you do the math, you’re going to find out you are not going to be collecting anything from Social Security – because you make too much money.
The very next question that most people ask is, “okay, if I’m not getting this money, is that money lost?”
Well, technically the answer is “no.”
Because two things are going to happen when you turn 67.
The first is social security is going to recalculate your social security benefit.
And the second thing, most importantly, is you’re going to get credited for the months where your benefits were withheld.
So it’s not like it’s going away.
You didn’t lose this money. But you didn’t get to collect it when you thought you would.
So that’s going to change your cash flow.
You need to be aware of that as you’re planning what your year is going to look like.
Another question that we get – whenever we talk about the earnings test with social Security – is “well forget about filing early. I’m 67, I’m taking my Social security now. I’m going to start taking it now. Can I still continue to work – and am I subject to this earnings test?”
No, you’re not. You can earn as much as you want.
So you’re not going to be penalized by continuing to work at 67, 68, 69 years old.
And you can continue to collect your (and) claim social security – starting at full retirement age, no penalty.
We get a lot of questions when it comes to social security.
This is easily… (when to) claim social security is one of the most talked about topics when it comes to planning with clients.
Thank you for watching “Should I Claim Social Security Early?”
