How Many Hours Can I Work If I Retire at 62?

Retiring at age 62 marks the earliest age to begin claiming Social Security retirement benefits. While this early claim can provide a valuable income stream, continuing to work past this age introduces specific considerations that can impact both your Social Security benefits and overall financial well-being. Balancing continued employment with retirement income requires understanding relevant rules. This article explores the financial aspects of working after claiming Social Security at age 62, focusing on earnings limits, tax consequences, and other benefits.

Understanding Social Security Earnings Limits

The Social Security Administration (SSA) does not impose limits on the number of hours you can work; instead, it limits the amount of earnings you can receive before your benefits are affected. If you claim Social Security benefits before reaching your full retirement age (FRA), your earnings above a certain threshold can lead to a reduction in your monthly payments. Full retirement age varies based on your birth year, but for those born in 1960 or later, it is 67.

For individuals under their full retirement age for the entire year, the annual earnings limit for 2025 is $23,400. If your earnings exceed this amount, the SSA will deduct $1 from your benefits for every $2 you earn above the limit. The SSA typically withholds full monthly checks until the required amount is met.

A different, more generous earnings limit applies in the calendar year you reach your full retirement age. For 2025, this limit is $62,160, and it applies only to earnings in the months before you reach your FRA. In this specific year, the SSA will deduct $1 from your benefits for every $3 you earn above this higher limit. Once you reach your full retirement age, the earnings limit no longer applies, and you can earn any amount without your Social Security benefits being reduced.

Benefits withheld due to exceeding the earnings limit are not permanently lost. When you reach your full retirement age, the SSA recalculates your monthly benefit amount to account for the months when benefits were withheld. This adjustment results in a slightly higher monthly benefit going forward, effectively returning the withheld amounts over your remaining lifespan. Individuals should report estimated earnings to the SSA to avoid overpayments or underpayments.

Tax Implications of Working in Retirement

Continuing to work while receiving Social Security benefits can introduce various tax considerations that impact your overall financial picture. Any wages or net self-employment income earned in retirement are generally subject to federal income taxes, just like any other earned income. This additional income could potentially place you in a higher income tax bracket, increasing your overall tax liability.

In addition to federal income tax, earned income is also subject to Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare. For 2025, the FICA tax rate for employees is 7.65%, consisting of 6.2% for Social Security and 1.45% for Medicare. Employers match these contributions, meaning a total of 15.3% is paid on your wages. For self-employed individuals, the self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare), as they are responsible for both the employee and employer portions.

A maximum amount of compensation is subject to the Social Security tax each year, which is $176,100 for 2025. There is no wage base limit for Medicare tax, meaning all earned income is subject to the 1.45% Medicare tax. These FICA taxes apply regardless of your age or whether you are already receiving Social Security benefits.

Working in retirement can also affect the taxation of your Social Security benefits themselves. The federal government may tax a portion of your Social Security benefits if your “combined income” exceeds certain thresholds. Combined income is calculated as your adjusted gross income (excluding Social Security benefits), plus any tax-exempt interest, plus one-half of your Social Security benefits.

For 2025, if your combined income is between $25,000 and $34,000 for single filers, up to 50% of your Social Security benefits may be subject to federal income tax. For married couples filing jointly, this threshold is between $32,000 and $44,000. If your combined income exceeds $34,000 for single filers or $44,000 for married couples filing jointly, up to 85% of your Social Security benefits may become taxable. These thresholds are not adjusted for inflation, which means more retirees may find a portion of their benefits subject to taxation over time.

Healthcare and Employer Benefits

When retiring at 62 and continuing to work, healthcare coverage is an important consideration, as Medicare eligibility generally begins at age 65. If you continue working for an employer that offers health insurance, you may be able to remain on their group health plan. Employer-sponsored coverage can often be more comprehensive and cost-effective than individual plans purchased through the Affordable Care Act (ACA) marketplace.

Remaining employed can also allow you to continue contributing to employer-sponsored retirement plans, such as a 401(k) or 403(b). This provides an opportunity to further boost your retirement savings, especially if your employer offers matching contributions.

Beyond health insurance and retirement plans, continued employment may offer other valuable benefits. These could include life insurance, disability insurance, or paid time off, depending on the employer’s policies and your employment status. These benefits provide financial protection and work-life balance that can be advantageous even in retirement.