Social security provides seniors with an income so they no longer have to work. While many wait until the true retirement age, which is between 65 and 67 (depending on your birth year), to claim the money, some people choose to tap into it early so they can start their retirement a little sooner. If you’re considering taking your social security early, you should read this first to learn about the repercussions doing so might bring.
Claiming Early Means Less Money
Sixty-two is the earliest you can claim social security. Doing so allows you to retire a few years earlier than you normally would have had to if you continued working until full retirement age. The decision is yours to make, but be aware that you do not receive the full benefits if you choose to take the money early. Your income gets reduced by a fraction of a percent every month prior to the normal retirement age.
If you were born in 1960 or after, the age to retire is 67. Take the money at 62 and you’ll be five years early, or 60 months. Say you normally would have received $1,000 per month in social security. Taking it early would only allow you $700 per month instead. The difference indicates a 30% reduction because you chose to quit work early and take the money.
Working While Taking Social Security
Just because you take social security doesn’t mean you can’t work. You absolutely can choose to work while receiving this money. The catch is that you may only earn a certain amount per year to still qualify for social security. If you make too much you will not receive the same benefit amount.
The limit as of 2017 was $16,920. Every two dollars you earn over this amount gets you a dollar in reduced benefits for the month. During the year you finally reach full retirement age, the one dollar reduction happens on every three dollars. You can make up to $44,880 for the year you reach the normal age before deductions occur. Once you reach the appropriate age, there are no further limits on what you can earn. You can claim your full benefits and go right back to working full time if you want.
Social security is around to help seniors stay on their feet. You pay into it during your career, and get some money back for you to retire once you reach the right age. While it is possible to take retirement early, you want to be sure you understand the working limits and reduction in benefits you’ll have to follow. It might be worth it to remain at work a few extra years so you can claim the full benefits when the time is right.
~Here’s to Your Financial Health!