4 Weird Social Security Rules Early Filers Need to Know About

If you’re eager to get your hands on your Social Security check as soon as you become eligible for it at 62, chances are good you’ll end up an early filer.

Early filers claim their benefits before their designated full retirement age (FRA), which is between 66 and four months and 67 depending when you were born. And they claim checks well before age 70, which is the age they’d need to start their payments if they want the maximum possible monthly check.

Early filing can sometimes make a lot of financial sense under the right circumstances, but before you make the choice to do it, you should know these four key rules.

1. Working less than 35 years could reduce your benefit

Filing for Social Security benefits early means your monthly checks will be below the standard benefit you’d get at your full retirement age — and well below the maximum benefit you’d receive at age 70. That’s because you’ll face early filing penalties that reduce benefits if they’re claimed before FRA and give up on earning delayed retirement credits that raise benefits for each year you delay after FRA.

But it’s not just these penalties and credits that could result in a smaller payment if you start getting checks ASAP. There’s also another important rule to know. It’s related to how Social Security benefits are calculated.

Specifically, you should be aware the amount of your standard benefit is based on average wages over the 35-year period when your salary was at its highest (after adjusting for inflation). An early claim for benefits increases the chances your career history won’t span a full 35 years. If that happens, your average wage will include some years of $0 earnings. And even if you do get 35 years in, there’s also a chance of shrinking your benefits if you have low earning years included that could’ve been replaced by higher-earning ones if your salary has gone up over time.

That’s why it’s important to consider your career history before making an early benefits claim. If you could increase your monthly Social Security income substantially by staying on the job for longer and getting more years of higher earnings included when your average wage is calculated, you may regret giving up that opportunity.

2. Earning too much while getting benefits could mean less income

Claiming Social Security doesn’t always mean you must stop working. But if you start checks before full retirement age and opt to keep earning a paycheck, you could run into problems.

If your earnings exceed a specific threshold while you’re working prior to FRA, your Social Security checks could be reduced or even stopped altogether. Here’s how this works:

If you won’t hit FRA at all during the year you’re working, benefits are reduced by $1 for every $2 earned above $19,560 in 2022.
If you’ll reach FRA some time during the year but haven’t yet, benefits are reduced by $1 for every $3 earned above $51,960 in 2022.

Eventually, you get credited back for this forgone income once you’ve reached full retirement age. Benefits go up a small amount for any month you didn’t receive a payment due to working too much. But in the meantime, if you were hoping to double dip and get Social Security and still earn plenty of supplementary income, you’ll find that won’t likely be possible.

3. Survivor benefits could be lower in the future

Making the choice to claim your checks early could have a dire impact on your widow(er) if you were the higher earner and outlive your spouse.

When one spouse dies, the husband or wife left behind gets the higher of the two benefits coming into the household. If you shrunk what should have been a large monthly Social Security check by claiming benefits early, your surviving spouse could have hundreds less to live on per month.

4. Rescinding a claim is possible in the first year, but it’s costly

Finally, before claiming benefits early, it’s important to know that your choice is often irrevocable.

Once you’ve begun receiving benefits, you do have the option to rescind your claim, but only if you do so within the first 12 months — and only if you can pay back all benefits received to date. If you can’t come up with thousands to give back to Social Security after deciding you regret an early claim, you’ll be out of luck and have no option but to live with your choice.

Before you make a decision as important as when to start your Social Security checks, be sure you’re aware of these rules and take into account what they mean for you and your life partner. Your retirement benefits will probably be a crucial source of income during your later years, and you don’t want to make a mistake that leaves you with less.

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