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If you're thinking about whether you're able to work and receive Social Security at the same at the same time, you're not alone. Many Americans think about how balancing a salary with monthly benefits can impact their earnings. The answer isn't an easy yes or no. It is contingent on the age you're in and your income. Let's look at what happens when you follow this dual income path.
Working Before Full Retirement Age
The majority of people begin to collect Social Security as early as 62, however the full retirement age is either 66 or 67 depending on the year you were born. If you are claiming benefits and continue working past the age of 67 then the Social Security Administration will take your earnings into consideration. By 2025, if earn more than $23,400 in wages or self-employment, you benefits could be reduced temporarily.
Earnings Limits and Reductions
The rule is simple: for each $2 you earn in excess of the limit for an annual period, you are able to deduct $1 from your Social Security benefits. Although this may seem disconcerting, it's not as bad in the long term as it initially appears. Many people find that—even with reductions in some areas—the financial flexibility of combining benefits and work provides worthwhile benefits.
It's awe-inspiring how working in the first few years of retirement can boost income and provide long-term benefits. A fact I had not fully appreciated until I spoke with recent retirees.
What Changes at Full Retirement Age?
When you reach the full retirement age, the earnings limit disappears. Whatever you earn, it is guaranteed that the amount of your Social Security benefits are unaffected. This can be a huge comfort for those who wish to earn more money without consequences. Many find that reaching the age of 50 is a crucial financial milestone.
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Getting Credit for Withheld Benefits
If you're a beneficiary and some of your earnings were withheld because you were working before reaching retirement age, there’s good news. The Social Security Administration automatically recalculates your benefits once you reach fully retired age, incorporating the months that were withheld. In time, this could result in some slightly greater future benefits.
Benefits of Delaying Social Security
Delaying your application to Social Security offers another route to increase your payments. Every year that you delay your application beyond the full retirement age — up to age 70—your monthly benefits increase. In the case of many, this method can result in a more relaxing retirement, and less financial burden later on.
In fact, if the most recent year in the workforce proves to be one of your most lucrative times, Social Security might recalculate your monthly earnings and increase the amount you get. This little-known fact can help many people feel encouraged to stay in the workforce longer.
In the end the point, you can work and receive Social Security, but the earnings you earn could affect your benefits prior to reaching the full retirement age. Then, you're entitled to earn as much you'd like, and in certain circumstances your benefits may increase. These rules are complicated, but knowing the rules can help you maximize the benefits of Social Security and plan your retirement with confidence. If you've ever thought, "can I still work and collect Social Security? " The answer is yes, with certain limitations.
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