When receiving Social Security retirement or survivor benefits, you are able to continue working. If you do, you and your family may benefit more from it.
Every year, we examine all Social Security beneficiaries’ records that include wage reports from the prior year. We recalculate your benefit and pay you any increase you are due if your most recent year of earnings is one of your highest years. The increase takes effect in January of the year following your income. Should you be eligible for survivors benefits, the extra income may enable your retirement benefit to surpass your existing survivors benefit.
Retiring at 62 may seem appealing, but it’s crucial to understand the impact it has on your Social Security benefits, especially if you plan to continue working. This guide will explore the earnings limit for those claiming early retirement and how it affects your benefits.
Key Takeaways:
- You can work while receiving Social Security retirement benefits at any age.
- If you claim benefits before full retirement age (67 for those born in 1960 or later), your benefits will be reduced if your earnings exceed a certain limit.
- The earnings limit for 2023 is $21,240 per year.
- For the year you turn your full retirement age, the limit is higher ($56,520).
- Once you reach full retirement age, there is no limit on how much you can earn.
- Social Security will recalculate your benefits when you reach full retirement age to account for any reductions due to earnings.
Understanding the Earnings Limit:
The Social Security Administration (SSA) has an annual earnings limit for those claiming early retirement benefits. This limit applies to earned income, which includes wages, salaries, tips, and net self-employment income. In 2023, the limit is $21,240.
If your earnings exceed the limit, your Social Security benefits will be reduced by $1 for every $2 you earn over the limit. This reduction applies only to the year you’re working and does not permanently lower your benefits.
Special Rule for the Year You Reach Full Retirement Age:
In the year you turn your full retirement age, a higher earnings limit applies. For 2023, the limit is $56,520. This means you can earn more without your benefits being reduced.
Example:
Let’s say you’re 62 years old and plan to claim Social Security retirement benefits. You expect to earn $25,000 from your job this year.
Since your earnings exceed the limit by $3,760, your benefits will be reduced by $1,880 ($3,760 / 2). This means your total benefits for the year will be reduced by $157 per month ($1,880 / 12).
No Limit After Full Retirement Age:
Once you reach full retirement age, there is no limit on how much you can earn. You can continue working and receive your full Social Security benefits without any reductions.
Recalculation of Benefits:
When you reach full retirement age, the SSA will recalculate your benefits to account for any reductions due to earnings. This means your monthly benefit amount may increase to reflect the lost benefits.
While you can work and claim Social Security retirement benefits at any age, it’s important to understand the earnings limit and how it affects your benefits. By planning ahead and considering your expected earnings, you can make informed decisions about claiming benefits and continuing to work.
Additional Resources:
- Social Security Administration: Retirement Benefits (https://www.ssa.gov/benefits/retirement/)
- Nolo: Can You Work While Collecting Social Security Retirement? (https://www.nolo.com/legal-encyclopedia/will-i-get-penalized-working-while-collecting-social-security-retirement.html)
Keywords:
- Social Security
- Retirement
- Early retirement
- Earnings limit
- Full retirement age
- Benefits reduction
- Recalculation
Note: This information is for general guidance only and may not apply to all individual circumstances. It is recommended to consult with a financial advisor or Social Security representative for personalized advice.
How Much Can I Earn and Still Get Benefits?
In our eyes, you are retired when you start getting Social Security retirement benefits. It is possible to work and receive Social Security retirement or survivors benefits simultaneously. There is a cap on the amount you can make though and still be eligible for all benefits.
We reserve the right to lower your benefit amount if you are under full retirement age and earn more than the annual earnings cap.
For every $2 you earn over the annual cap, we deduct $1 from your benefit payments if you are not yet at full retirement age for the entire year. For 2024, that limit is $22,320.
We deduct $1 from your benefits in the year you reach full retirement age for every $3 you earn over a certain threshold. In 2024, this limit on your earnings is $59,520. Your earnings are only taken into account until the month before you become fully retired; your total earnings for the year are not taken into account.
We have a special rule that applies to earnings for one year if your earnings will exceed the annual limit and you will receive retirement benefits for a portion of the year. Regardless of your yearly earnings, the special rule allows us to pay your full Social Security benefit for any full month that we deem you retired.
When applying the annual earnings test (AET) for retirement or survivors benefits, we use your full retirement age if you receive survivors benefits. For AET purposes, we use your full retirement age for retirement benefits, even though the full retirement age for survivors benefits might be earlier. Even if the beneficiary is not eligible for retirement benefits, this rule still applies.
For additional information, see our publication “How Work Affects Your Benefits.”
When you reach full retirement age:
- No matter how much you earn, your earnings will no longer reduce your benefits starting in the month you reach full retirement age.
- In order to give you credit for the months in which we reduced or withheld benefits because of your excess earnings, we will recalculate the amount of your benefits.
How much your Social Security benefits will be if you make $30,000, $35,000 or $40,000
FAQ
How much money can you make at 62 and still draw Social Security?
Can I retire at 62 and still work full time?
How much retirement income at age 62?
How much money will I lose if I retire at 62 instead of 65?
How much money can I get if I retire at 62?
If you retire at age 62 in 2024, the maximum amount is $2,710. However, recall that you receive a higher benefit if you delay payments beyond your full retirement age. Thus, if you retire at 70 in 2024, the maximum benefit is $4,873. Keep in mind that these are the highest amounts you can receive.
How much money can I earn before full retirement age?
If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520. Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits. Let’s look at a few examples.
How much money can you get if you retire at 67?
In 2024, the highest monthly benefit you can receive at the full retirement age of 67 is $3,822. If you retire at age 62 in 2024, the maximum amount is $2,710. However, recall that you receive a higher benefit if you delay payments beyond your full retirement age. Thus, if you retire at 70 in 2024, the maximum benefit is $4,873.
How does age 62 affect retirement benefits?
At Age 62 3. The retirement benefit is reduced by 4. The spouse’s benefit is reduced by 5. If you were born on January 1 st, you should refer to the previous year. If you were born on the 1 st of the month, we figure your benefit (and your full retirement age) as if your birthday was in the previous month.