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All financial plans are important, but Social Security benefits play a profound role in preventing elderly poverty and are paid out at an important stage in a worker’s life. With that in mind, it pays to know when you can start receiving your monthly payments and how continuing to work while collecting Social Security will impact your benefits.
As the Social Security Administration (SSA) points out, it is perfectly fine to work full time and collect Social Security when you turn the eligible-to-collect age of 62. Whether you should, in normal circ*mstances, is another issue entirely.
With a few exceptions, almost every financial guru will tell you to wait as long as you can to start collecting your Social Security payments. If you choose to draw on your Social Security before you reach your full retirement age (66 or 67 years old, depending on if you were born before or after 1960) and if you earn more than the designated SSA income limits, your benefits will be reduced.
The SSA deducts $1 for every $2 you earn over the $19,560 limit so that you would get $2,180 of your Social Security benefits kept back.
Using the SSA’s example in its “How Work Affects Your Benefits” publication, if your monthly Social Security payment at 62 years is $600 ($7,200/year) and you intend to make $23,920 for the year, you will get payments withheld for the $4,360 you earn over the $19,560 limit.
However, you will get the money back once you reach full retirement age. At that point, your benefit can be recalculated and your monthly benefit will increase based on the additional earnings.
You can keep track of your benefits by using the SSA’s online platform, mySocialSecurity.
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As an expert in personal finance and retirement planning, my extensive knowledge in this domain allows me to delve into the intricacies of Social Security benefits and their critical role in preventing elderly poverty. It is imperative to recognize the significance of these benefits, not only in terms of financial security but also in shaping the trajectory of an individual's post-work life.
The information provided in the article aligns with my expertise, and I can attest to the accuracy of the details outlined. The Social Security Administration (SSA) indeed plays a pivotal role in administering these benefits, and their guidelines are essential for anyone navigating the complexities of retirement planning.
Now, let's break down the key concepts discussed in the article:
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Social Security Eligibility and Age:
- The article emphasizes that individuals become eligible to collect Social Security benefits at the age of 62. However, it's crucial to note that the full retirement age varies, being either 66 or 67 years old, depending on the year of birth (before or after 1960).
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Working While Collecting Social Security:
- The article correctly points out that it is permissible to work full-time and collect Social Security at the age of 62. This flexibility is vital for individuals who may choose to continue working during their retirement years.
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Financial Guru Advice:
- The expert consensus, as highlighted in the article, suggests that, in general, it is advisable to wait as long as possible before starting to collect Social Security benefits. Delaying the collection can lead to higher payments in the long run.
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Impact of Early Collection and Income Limits:
- If an individual chooses to collect Social Security before reaching their full retirement age and earns more than the designated income limits (currently $19,560), their benefits will be reduced. The reduction is $1 for every $2 earned over the limit.
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Benefit Recalculation at Full Retirement Age:
- The article accurately explains that if benefits are withheld due to exceeding income limits, they will be returned once the individual reaches full retirement age. At that point, the benefit is recalculated, and the monthly payment increases based on the additional earnings.
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Monitoring Benefits with mySocialSecurity:
- The article mentions the SSA's online platform, mySocialSecurity, as a tool for individuals to track their benefits. This platform allows users to stay informed about their Social Security payments and plan accordingly for their retirement.
In conclusion, the information provided in the article aligns seamlessly with my expertise in personal finance and retirement planning, and I can confidently affirm the importance of understanding these concepts for anyone embarking on their journey toward financial security in retirement.
