Seniors are often advised to wait until full retirement age (FRA) to sign up for Social Security. That age is based on your year of birth, and it's 67 for anyone born in 1960 or later.
You're allowed to sign up for Social Security at any age starting at 62. But claiming benefits ahead of FRA will mean reducing them on a permanent basis. And that could be a dangerous thing, because you never know when your savings might get whittled down to $0, leaving you with only those benefits to live on.
Still, you may be inclined to file for Social Security ahead of FRA in 2024. Your reasons for doing that might run the gamut from wanting to scale back to part-time work to being able to travel while your body is still in shape for it.
But claiming Social Security early may not only result in a permanently reduced benefit. You might end up having some of that already slashed benefit withheld if you continue to work and earn too much money.
Keep the earnings-test limit in mind
You're allowed to collect Social Security even if you're receiving a regular paycheck from work. And once you reach FRA, your work-related earnings won't affect your Social Security benefits in any way. But if you claim Social Security early while continuing to work, you'll need to be mindful of the earnings-test limit, which is a number that changes from year to year.
In 2024, the earnings-test limit is $22,320. If you earn more than that, you'll risk having $1 in Social Security withheld per every $2 of earnings over the limit.
Rest assured that you won't lose your withheld benefits completely. Rather, you'll get that money added back into your benefits once you reach FRA.
But remember, claiming benefits early means slashing your monthly Social Security payments for life. There may not be any sense in doing that if you're going to lose a large chunk of that income anyway due to exceeding the earnings-test limit.
It's a higher number when you're reaching FRA
The $22,320 earnings-test limit applies to workers who are collecting Social Security ahead of FRA in 2024 but who also aren't reaching FRA in 2024. If you will be reaching FRA next year, you can earn up to $59,520 without having your benefits affected. From there, you'll risk having $1 in Social Security withheld per every $3 of earnings over the limit.
But either way, it's important to know the rules if you're thinking of claiming Social Security in 2024 and you won't be reaching FRA by then. If you know with certainty that you won't be working, you can technically disregard the earnings-test limit. But if you do plan to continue to hold down a job, then you may want to either limit your hours (and income) at work, or otherwise consider delaying your Social Security claim if you're able to swing that financially. It could, in fact, make sense to tap your savings for a year or two to line up a higher monthly benefit for life.
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