A few things to consider before going on claim.
For many Americans, retirement isn’t a single event — it’s a transition.
Some reduce hours, some change careers, and others keep working because they enjoy what they do. Whatever your path, understanding how work affects your Social Security benefits is key to making smart decisions.
Full Retirement Age: The Line in the Sand
Your Full Retirement Age (FRA) depends on when you were born — between 66 and 67 for most retirees today. At this age, you qualify for 100% of your benefit based on your earnings record. Before that, claiming early can reduce your benefit — and if you’re still working when you claim, the earnings test may reduce it even more (temporarily).
If You Claim Before FRA
If you start benefits before reaching FRA, there are two ways your benefit can be reduced. First, for every year you claim prior to reaching FRA, your benefit is reduced by around 6%. That reduction is permanent.
Second, if you still earn income when you claim, Social Security applies an earnings limit that reduces your SS benefit based on how much money you earn outside of your SS benefit.
- In 2025, you can earn up to $22,320 without penalty.
- Above that, $1 in benefits is withheld for every $2 earned.
- In the year you reach FRA, the limit rises to $59,520, and the penalty is $1 withheld for every $3 earned.
Once you hit FRA, the earnings limit disappears — and any withheld benefits are recalculated, so you don’t lose them permanently.
If You Wait Until FRA or Later
If you wait until Full Retirement Age, you can work and earn as much as you’d like without reducing your benefit.
If you delay beyond FRA, your benefit grows roughly 8% per year until age 70 thanks to delayed retirement credits. That increase is permanent and can meaningfully boost your lifetime income.
Let’s look at an example: Lisa’s Dilemma
Lisa is 63 and earns $60,000 a year.
If she claims now, much of her benefit would be withheld due to the earnings test.
If she waits until 67, her benefit is 30% higher — and if she delays to 70, it’s 24% higher again, with no earnings restriction.
At a Glance: How Timing Affects Your Benefit
| Claiming Age | % of Full Benefit | Earnings Limit Applies? |
|---|---|---|
|
62 (Earliest) |
~70–75% |
Yes – $22,320 limit |
|
FRA (66–67) |
100% |
No |
|
70 (Latest) |
~124–132% |
No |
Example:
If Lisa is 63 and earns $60k per year, and her Social Security benefit at Full Retirement Age (FRA) is $1,500, or $18,000 per year, she would have several things working against her. First, she would receive 75% of her FRA benefit, which would be $1,125 per month, instead of the $1,500 amount. (source https://www.ssa.gov/benefits/retirement/planner/1960.html) Second, she would have her SS benefits reduced because she earns more than $22,320 in income. She earns $37,688 more than the amount she can earn without having her SS benefit reduced. The reduction in this example would be $1 of SS benefit for every $2 earned above the earnings limit, so she would have her SS benefits reduced by $18,840 annually, which is more than her SS claim. In effect, she would take home none of her SS claim because of penalties.
It can be useful to work with a financial planner to see what you can expect to receive over the duration of your Social Security claim, based on when you claim. You can see that Lisa’s claim at age 62 doesn’t make any sense, but her claim at 70 does. There is a middle ground, and depending on how Lisa feels about working, and other external needs she has, she might want to retire before age 70 but wait to claim if she has other assets to utilize.
The Bottom Line
Working longer can help you save more, reduce the years your portfolio needs to provide income, and increase your Social Security benefit. But the best claiming strategy depends on your health, other income sources, and long-term goals.
A thoughtful plan — guided by an advisor — can ensure you get the most out of your benefits while balancing work, taxes, and income needs.
Channel Wealth | Fiduciary Advisors
Helping families align their financial independence, retirement income, and legacy goals.