Unfortunately, there isn’t a one size fits all answer to what you should do. However, with the right facts about how it works you should be able to make a more educated decision. Now that it’s more common than ever for people to be working or have a spouse who is working past 65, when to drawl Social Security is something we talk about weekly. The things to think about when you are close to retirement are: “What age is my full retirement?” “How many years am I from full retirement age?” “Do I need the Social Security income now?” And what I want to focus on right now is the question, “Will I lose benefits if I am continuing to working?” The answer from Social Security’s website is as such:
“If you’re younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.”
Let me explain a little more detailed. The limit in 2021 is $18,960. If you earn more than this limit and are under your full retirement age, Social Security must deduct $1 from your benefits for each $2 you earn above the limit. Interestingly this deduction is not lost forever. HORRAY! Social Security will pay a higher monthly benefit when you reach full retirement age. So if you work and surpass the limit, don’t be too hard on yourself as you will see it added back in to your Social Security when you reach full retirement.
Social Security states, “So, if you work and earn more than the exempt amount, it won’t, on average, decrease the total value of your lifetime benefits from Social Security — and can increase them.”
Those who collect Social Security disability benefits or Supplemental Security Income have different rules and must report all earnings to Social Security. Also, different rules apply if you work outside the United States.
So long story short, if you want to work and collect Social Security benefits before your full retirement age, you have the option to do so with a limitation. If you make over the limit set for that year, you will have a deduction but will get it back later. I have met so many clients worried about this exact scenario, and I think it’s mostly because they think the deduction is their earned money being lost forever. But now you know– that is not the exact case.
Social Security has great information on their website about retirement and your many options. There is even a calculator you can use to see what you will make at different ages based on your employment income. Saves you a call to Social Security, and allows you to track changes over the years.
Pass the word along to your friends.
Contact me today with your questions – 724-879-5030 or email@example.com