Claiming Social Security as soon as possible has an undeniable appeal: You get the greatest number of checks, and for some, it might enable you to retire sooner than you could if you had to rely on savings alone. But applying for Social Security early brings its own set of challenges too.

Signing up at 62 can reduce your checks by up to 30%. It can also put you at risk of losing even more money to an obscure Social Security rule.

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Working and claiming Social Security at the same time may not go as expected

Social Security’s earliest claiming age remains its most popular, with roughly one-quarter of applicants signing up at 62 in 2023. But many Americans choose to retire later than this. It’s possible to claim benefits while you’re still working.

However, if you do this, you have to watch out for the earnings test. This withholds money from your checks if your income from your job exceeds certain limits. In 2025, you lose $1 from your checks for every $2 you earn over $23,400 if you’ll be under your full retirement age (FRA) all year. FRA is 67 for most workers today, but it can be as young as 66 for some older retirees.

If you’ll reach your FRA in 2025, you only lose $1 from your checks for every $3 you earn over $62,160. This only applies if you earn this much before you reach FRA.

It’s possible that some people on Social Security, particularly those with higher salaries, could see some months when they don’t get any benefits because the earnings test takes it all. This can be frustrating, particularly if you counted on your checks to pay your bills. But it’s not all bad news.

Once you reach your FRA, the government will no longer withhold any money from your checks due to the earnings test, no matter how much you make at your job. It will also increase your benefits going forward to make up for what it withheld previously. If you had a large sum withheld in past years, the boost could be substantial.

Avoiding the earnings test

Getting extra benefits back at FRA is nice, but you should know that you’re not going to get the same amount you would have if you’d just delayed your Social Security application until your FRA in the first place. Receiving benefits under your FRA reduces the size of your checks. The earlier you claimed, the greater the reduction.

If you’re not claiming yet and don’t need your Social Security checks to get by, it might be to your advantage to wait until you retire or reach your FRA to apply. This way, you won’t have any early claiming penalty, and you won’t have to worry about the earnings test either.

Another option if you want to claim checks sooner is to consider scaling back your hours to reduce the income you earn from your job. This could work if you’re interested in slowly transitioning to retirement over time. Your Social Security checks can help to make up for the smaller paychecks you’re getting from your job, and if you keep your salary under $23,400, you won’t lose anything to the earnings test.

Sometimes, no matter what you do, you might not be able to avoid the earnings test. But worst-case scenario, you’ll get the withheld funds back at your FRA. Plus, earnings test limits tend to rise every year. So just because you had money withheld this year doesn’t mean you will in future years.

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