By now, you probably know that waiting until “full retirement age” to claim for Social Security can give you a larger monthly benefit. Your full retirement age is defined, by Social Security, according to the year that you were born and ranges from age 65 to 67.
However, you can also claim benefits “early”, starting when you turn 62. People take this route for various reasons, such as needing to retire early or needing the extra monthly income. Commonly, people will retire from their primary occupation and then go back to work part time in order to stay busy and make some extra money. If you find yourself in the situation of working while you are receiving Social Security income, it’s critical to understand the ramifications. The primary issue with this scenario is that if you earn over a certain amount of annual income from a part time job, Social Security will withhold part of your benefits.
This rule only applies to beneficiaries who have yet to reach full retirement age. After that point, your benefits are never withheld no matter how much you earn. And, it only applies to those who earn more than the limit, currently $16,920. For every two dollars you earn over this threshold, one dollar of your Social Security benefits will be withheld.
The money isn’t actually lost forever. When you reach full retirement age, Social Security will recalculate your monthly benefit to include the amounts previously withheld. So you do get your money, eventually, but the whole thing could come as a shock to those who weren’t expecting it.
We will continue to keep you informed on retirement planning issues that might affect you, either now or in the future. In the meantime, remember to give us a call if you have any questions. Regular consultations can help you keep your retirement plans on track.