My understanding is that if you draw Social Security at age 62 that you are only allowed to make so much per year. What happens if you make more than that? Probably a stupid question but I'm just curious.
Drawing Social Security early....
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LoboGunLeather
US Veteran
My understanding was that earnings over the threshold resulted in the loss of $1 in monthly benefit amount for every $2 earned over the threshold, which was about $16,000 last time I checked. But continued earnings and SS withholding are credited to your account so future benefits can be increased.
Also, the earnings threshold applies only to earned income (wages, salaries, commissions, tips, rents, whatever), but interest, dividends, capital gains are not considered to be earned income.
One of our financial advisors crunched the numbers for us, comparing the reduced amount of early SS retirement benefit against the full amount at a later age. Turned out it would take 17 years for me to reach the tipping point, comparing the total paid in reduced benefits to the total paid if I waited to so-called full retirement age.
I claimed SS retirement at age 62, but I still had income well over the threshold so I put my benefits on "hold" for a couple of years until I sold the business and retired. Income from sale of the business was treated as long-term capital gain so it had no effect on my SS benefit. When I lifted the "hold" on benefit payments I was able to take nearly a full year of benefits as a lump sum payment without affecting my future payments.
A couple of years later I received a letter from SS, they had audited my account records, found that they were underpaying me, raised my monthly benefit, and credited my bank account with all the prior underpayment amounts.
It is worthwhile to get some advice from financial advisors and tax specialists.
Also, the earnings threshold applies only to earned income (wages, salaries, commissions, tips, rents, whatever), but interest, dividends, capital gains are not considered to be earned income.
One of our financial advisors crunched the numbers for us, comparing the reduced amount of early SS retirement benefit against the full amount at a later age. Turned out it would take 17 years for me to reach the tipping point, comparing the total paid in reduced benefits to the total paid if I waited to so-called full retirement age.
I claimed SS retirement at age 62, but I still had income well over the threshold so I put my benefits on "hold" for a couple of years until I sold the business and retired. Income from sale of the business was treated as long-term capital gain so it had no effect on my SS benefit. When I lifted the "hold" on benefit payments I was able to take nearly a full year of benefits as a lump sum payment without affecting my future payments.
A couple of years later I received a letter from SS, they had audited my account records, found that they were underpaying me, raised my monthly benefit, and credited my bank account with all the prior underpayment amounts.
It is worthwhile to get some advice from financial advisors and tax specialists.
hemiram
Member
I'm making too much this year and just got the letter telling me no check until next year. Same deal as last year, just worse. I don't really even understand, but when I look at my deposits of SS checks, there are a couple extra partial ones, so I'm actually only going to be out about $500 for the year. The check is just "fun money" at this point anyway. It almost exactly pays my rent per month. I'm glad I took it early, but my mother did too, and she lived another 25 years and we figured out how much she lost over those 25 years if she had waited until she was 66 and it was kind of depressing.
Retired LTC USAR
US Veteran
If you can wait till age 70 to retire, then your difference between full retirement age and 70 is around 35% IIRC.
Going to be 64 this year. Full retirement age for me is 66 4 months. If my health holds out, I hope to work till around 69 or 70.
Going to be 64 this year. Full retirement age for me is 66 4 months. If my health holds out, I hope to work till around 69 or 70.
Maddog 521
Member
You might want to consider this also. The amount you draw goes up 8% per year after age 62.
Also, if your earnings in the years after age 62 are your peak earning years that will increase your SS payments at full retirement.
We are not promised tomorrow........You could wake up dead in the morning.....Just sayin.
Three important things to consider is how healthy you are, how much longer you may live and how much S.S. benefits your wife will get when she retires.
My Father-in-Law retired early from a high paying job and took his S.S. benefits. His retirement dream was living by a lake, fishing a lot and travel the country in a huge Class A motorhome. Well none of those plans ever worked out as life has a way of changing things. He has also lived a lot longer than expected. He is now 86 years old and his wife in her early 80's. He didn't manage his retirement money very well and full retirement age S.S. checks would be a real help for them.
I have to wait 10 more days to reach my full retirement age. I applied for and was approved by S.S.A. back in August. This is one of the few birthdays I am looking for.
My original plan was to keep working but medical problems with a bad disk in my lower back and a jerk coworker made me decide continuing to work wasn't worth it. I already have a monthly lifetime retirement check coming in so i now will have two safety nets. Also my wife can claim my benefits after I die. She works a high paying job and has a excellent retirement plan from her employer but her S.S. benefit will most likely be smaller than mine.
One big thing I have noticed with some retirees is they do not have a plan for staying busy after they retire. In fact I had a retiree ask about who I had retired from so he could apply for my job. I have enough chores to keep me busy for at least five more years. In fact I have not found the time to go shooting in over two months and the shooting range is just five miles away from my home.
My Father-in-Law retired early from a high paying job and took his S.S. benefits. His retirement dream was living by a lake, fishing a lot and travel the country in a huge Class A motorhome. Well none of those plans ever worked out as life has a way of changing things. He has also lived a lot longer than expected. He is now 86 years old and his wife in her early 80's. He didn't manage his retirement money very well and full retirement age S.S. checks would be a real help for them.
I have to wait 10 more days to reach my full retirement age. I applied for and was approved by S.S.A. back in August. This is one of the few birthdays I am looking for.
My original plan was to keep working but medical problems with a bad disk in my lower back and a jerk coworker made me decide continuing to work wasn't worth it. I already have a monthly lifetime retirement check coming in so i now will have two safety nets. Also my wife can claim my benefits after I die. She works a high paying job and has a excellent retirement plan from her employer but her S.S. benefit will most likely be smaller than mine.
One big thing I have noticed with some retirees is they do not have a plan for staying busy after they retire. In fact I had a retiree ask about who I had retired from so he could apply for my job. I have enough chores to keep me busy for at least five more years. In fact I have not found the time to go shooting in over two months and the shooting range is just five miles away from my home.
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I HATE when that happens......
I turned my benefits on are 65 so my wife could retire. No regrets.
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Take it ASAP, tomorrow is not guaranteed.
The government folks that set social security payments are rather knowledgeable. For someone who lives to the average life expectancy it doesn't matter when you start taking social security payments. It's a wash if you start taking it early or late. Sure the payments go up if you take it later, but you have fewer payments before you kick the bucket.
All this applies if you're "average." It's a game of odds. If you think you'll live a long life, your plan may be different that somebody likely to die young. Who wants to think about that?? I'll be making my decision on my expected financial needs at retirement. Actually, I think a "bird in the hand" applies; even if it's a smaller bird than those in the bush. YMMV....
All this applies if you're "average." It's a game of odds. If you think you'll live a long life, your plan may be different that somebody likely to die young. Who wants to think about that?? I'll be making my decision on my expected financial needs at retirement. Actually, I think a "bird in the hand" applies; even if it's a smaller bird than those in the bush. YMMV....
I took mine at 63 1/2, (16 years ago) as I couldn't get COBRA for health ins for more than 18 months. I have a reasonable pension, Social Security, a minimal VA Disability and my wife's SSA. I have only one recommendation for retirement. Have NO DEBT. And, make no new debt. Then, put into savings 20-30% of your income so you are set up to not have to have any new debt. Since I retired we built a new condo, took 3 European vacations and an Alaskan cruise, bought two new cars, and everything was paid for in cash. (not to mention over 100 firearms purchased, mostly SW).
To be able to get up every morning and never worry about paying for anything is the best peace of retirement.
To be able to get up every morning and never worry about paying for anything is the best peace of retirement.
GypsmJim
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At age 62 I put together a huge spreadsheet showing what my annual income would be for every year up to age 70. Naturally, 62 was the only guaranteed figure, since at that time I was at my peak earnings and I had to estimate the other 8 years.
A second spreadsheet added up all my insurance costs, utilities, vacations expenses, etc., etc. Those also were updated every year based on projected inflation.
Not an exact science.....lots of guesswork involved, but it amounted to my best estimates. Today we go out in the boat twice a week, take 2 cruises a year, eat out twice a week, go shooting once a week, etc. I figured as we get older our activities will diminish as the years go by, so if all the fixed costs increase it will all balance out.
Anywhoot, I graphed all the data and observed where the lines crossed. It was at age 67, which was full retirement age for me. In other words, at age 67 I figured I could afford to live life the way I wanted to with no penny pinching required.
So, that's when I retired! As it turned out, my insurance didn't go up as much as expected, my SS was a bit higher and my pension was a bit lower. All in all, we have a slight surplus every month.
It won't work for everyone, but it worked for me. The state of your health, your personal priorities and the amount of your hobbies can also be overriding factors.
A second spreadsheet added up all my insurance costs, utilities, vacations expenses, etc., etc. Those also were updated every year based on projected inflation.
Not an exact science.....lots of guesswork involved, but it amounted to my best estimates. Today we go out in the boat twice a week, take 2 cruises a year, eat out twice a week, go shooting once a week, etc. I figured as we get older our activities will diminish as the years go by, so if all the fixed costs increase it will all balance out.
Anywhoot, I graphed all the data and observed where the lines crossed. It was at age 67, which was full retirement age for me. In other words, at age 67 I figured I could afford to live life the way I wanted to with no penny pinching required.
So, that's when I retired! As it turned out, my insurance didn't go up as much as expected, my SS was a bit higher and my pension was a bit lower. All in all, we have a slight surplus every month.
It won't work for everyone, but it worked for me. The state of your health, your personal priorities and the amount of your hobbies can also be overriding factors.
Aggie1906
US Veteran
I did it at age 62, because I needed to.
My understanding is the ding on over earning is only
until you reach your full retirement age.
Also, my understanding, is the increasing amounts, as someone
else posted, are intended to be financially neutral.
Win or lose, depending on how long you live.
My understanding is the ding on over earning is only
until you reach your full retirement age.
Also, my understanding, is the increasing amounts, as someone
else posted, are intended to be financially neutral.
Win or lose, depending on how long you live.
I always looked at it kinda like insurance. Plan not to need it, so wait until 70 to take it. A kind of bonus to myself. When I hit 65, so a year before full retirement age, received a dire medical diagnosis so took it ASAP. I've recovered, but it was the right thing to do in the circumstances.
As others have said, when to take it depends on one's circumstances.
As others have said, when to take it depends on one's circumstances.
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LoboGunLeather
US Veteran
Come on everyone, join me in the Hallelujah Chorus! NO DEBT! NO NEW DEBT!
Keep that DISPOSABLE INCOME as disposable as possible!
This! My peak earnings were for the past decade - that just more than doubled what I would have received if I hadn't switched careers. I'm just now not working with 9 months to SocSec at full retirement age (FRA).
double-dipper
Member
That's what the government is hoping for, the sad truth is a lot people pay in for 40-50 years and never draw a penny. I'm taking mine at 62!!!!!!
A key financial factor to the retirement decision is health care. For many before the age of 65, their budget simply won't support going from an employee paid/subsidized health plan to full out of pocket costs which for some = much of their SS payment. Under those circumstances 65 becomes the 'sweet spot', able to go onto Medicare and an F plan (critical to avoiding major medical bills even with Medicare). Our AARP F plan costs about $130 a month for each of us.
Having witnessed the way too early passing of parents and relatives, we realized life was way too short to keep on the grind due to worries about affordability in old age. So we both retired at 62, having factored our health care costs for the next three years into our budget, and remain grateful for that decision.
Retirement is a time vs money decision, and for all but the very fortunate, it is usually comes down to one of the two.
Having witnessed the way too early passing of parents and relatives, we realized life was way too short to keep on the grind due to worries about affordability in old age. So we both retired at 62, having factored our health care costs for the next three years into our budget, and remain grateful for that decision.
Retirement is a time vs money decision, and for all but the very fortunate, it is usually comes down to one of the two.
