The Two Decisions Embedded in This Question

Decision 1: Stop your career. This is a quality of life decision. You may transition to consulting, hourly work, seasonal work, board service, or a passion business. The income may drop substantially or stay surprisingly steady — what changes is the relationship you have with your time.

Decision 2: Claim Social Security. This is a lifetime financial decision. You can claim as early as 62 (with a permanent reduction), at full retirement age (66 or 67), or at any month up to 70 (with delayed retirement credits). The choice affects your check, your spouse's survivor benefit, and your tax position for the rest of your life.

You can absolutely retire at 62 and continue working. What you usually should not do — and what people often do reflexively — is claim Social Security at the same time.

The Social Security Earnings Test

If you claim Social Security before full retirement age (FRA) and continue earning wages, the earnings test reduces your benefit. The thresholds change annually and recent figures have been around $22,320 in 2024 and increase each year.

The mechanics:

• Below the lower threshold: Earnings have no effect on your Social Security benefit.
• Above the lower threshold (years before FRA): Social Security withholds $1 of benefit for every $2 of earnings above the limit.
• The year you reach FRA: A higher threshold applies and the formula softens to $1 withheld for every $3 of excess earnings.
• Starting the month of FRA: The earnings test goes away entirely. You can earn unlimited income with no benefit reduction.

The most underappreciated detail: withheld benefits are not lost. When you reach FRA, Social Security recomputes your benefit upward to credit the months that were withheld. Over a long retirement, most of the “reduction” is recovered. The earnings test feels like a penalty in the moment, but it is structurally a deferral, not a cost.

Real Scenario: Karen, 62, Consulting Income

Karen left her corporate role at 62 and picked up consulting that pays roughly $80,000 a year. She has $900,000 across an IRA and a Roth, and a projected Social Security benefit of $2,650 at her FRA of 67.

The instinctive plan: Karen claims Social Security at 62 to start collecting. Her benefit at 62 is reduced to about $1,855 a month — $22,260 a year. Combined with $80,000 of consulting income, the earnings test withholds nearly her entire Social Security check (roughly $28,840 of withholding against her $22,260 of benefits, meaning Social Security pays nothing in those years and the withheld months are credited later).

The result: Karen filed for Social Security, gets effectively nothing for the years she works, and locked in a permanently reduced benefit anyway when the recomputation happens at FRA.

The structured plan: Karen does not claim. She lives on her consulting income and lets Social Security keep accruing. At 67 she has the option to claim or keep deferring to 70 for the maximum benefit. She also uses her low-portfolio-withdrawal years to do Roth conversions in the 12% bracket. By the time she actually claims, her benefit is materially larger, her IRA is smaller, and her tax bracket through her 80s is lower than it would otherwise have been.

Real Scenario: Mike, 62, Part-Time Bridge

Mike is 62, single, and ready to leave his stressful job. He plans to take a part-time role at $25,000 a year for a few years. He has $700,000 in a 401(k) and a projected Social Security of $2,200 at 67.

Mike's wages of $25,000 are within shouting distance of the earnings test threshold. Even if he claimed early, the withholding would be modest. But because he is single and has a smaller portfolio, every dollar of permanent benefit reduction matters more for him over a long retirement.

The structured plan for Mike: claim Social Security at 67 (his FRA), use the part-time wages plus modest 401(k) withdrawals to bridge, and convert smaller amounts to Roth in the years where his bracket allows. This adds roughly $400 a month to his Social Security check for life — about $4,800 a year, which compounds into more than $100,000 over a typical retirement.

When Claiming Early Actually Makes Sense

Claiming Social Security at 62 while still working is rarely optimal, but there are situations where it is defensible:

• Health concerns: A significantly shortened life expectancy changes the breakeven math. If you are unlikely to live past 75, the lifetime difference between claiming at 62 and claiming at 70 narrows.
• Spousal coordination: A lower-earning spouse may claim earlier to provide household income while the higher-earning spouse defers until 70 — preserving the larger benefit for the survivor.
• Liquidity stress: Some households genuinely need the income at 62 to avoid drawing down assets at fire-sale prices in a market downturn.

Outside of these specific cases, the default should be to defer.

The Tax Layer Most People Miss

When you continue to earn while collecting Social Security, the interaction between earned income, IRA withdrawals (if any), and Social Security benefits compresses your taxable income into a higher bracket than any one source would suggest. Up to 85% of your Social Security can become taxable, and you may push into IRMAA tiers that raise your Medicare premiums two years later.

Many retirees who “retire at 62 and still work” discover in April of the following year that their tax bill is hundreds or thousands of dollars higher than expected, because of the stacking. That cost is structural and avoidable with planning.

The Bottom Line

Yes, you can retire at 62 and still work. The mistake is treating that as a single decision. The retirement-from-career decision is a lifestyle question. The Social-Security-claiming decision is a lifetime financial question.

In most cases the right combination is: yes, retire when you want; no, do not claim Social Security yet. Defer the benefit, use earned income and portfolio bridge withdrawals to fund the gap, and use the low-bracket years to do Roth conversions. The compounding effect of getting that combination right is one of the largest decisions in personal finance.