Dear Early Retiree,
If you started receiving Social Security benefits early at age 62, it’s important to understand how additional income can impact your benefits until you reach full retirement age (FRA). The full retirement age varies depending on when you were born, as it has been adjusted over the years to account for changes in life expectancy and program funding.
For individuals born before 1943, the FRA was 65. For those born between 1943 and 1959, the FRA is 66, with an additional two months added for each birth year between 1955 and 1959. For those born in 1960 or later, the current FRA is 67. It’s worth noting that there have been discussions in Congress about potentially raising the retirement age again, but any changes would likely follow a similar birth-year model to minimize the impact on those nearing FRA.
While you are working and receiving Social Security benefits, your earnings can affect the amount you receive until you reach full retirement age. If you earn income over the limit, which is $22,320 per year for 2024, your yearly benefits will be reduced by $1 for every $2 you earn. Once you reach full retirement age, your earnings will no longer impact your benefit amount.
After reaching full retirement age, your monthly benefits will be recalculated to account for any months in which your benefits were reduced due to working. This means that while your monthly benefits may be temporarily reduced while you are earning income, the total amount you receive over time remains the same.
In summary, it’s important to be aware of how working and earning income can impact your Social Security benefits until you reach full retirement age. Understanding the rules and limits can help you make informed decisions about your finances as you navigate retirement. If you have any further questions or concerns about Social Security benefits, don’t hesitate to reach out to a financial advisor or the Social Security Administration for guidance.
Sincerely,
Dana Miranda
Certified Educator in Personal Finance®
The Penny Hoarder
