Can I draw Social Security at 62 and still work full time?

Can I draw Social Security at 62 and still work full time?

Social Security Benefits Eligibility:

According to the Social Security Administration (SSA), individuals are eligible to start receiving retirement benefits as early as age 62. However, there are certain regulations and limitations one must consider before making a decision.

Full Retirement Age:

The Full Retirement Age (FRA) is the age at which a person becomes entitled to receive the full Social Security retirement benefit. It is based on the year of birth, and for individuals born between 1943 and 1954, it is 66. If you choose to start receiving benefits at age 62, your monthly benefit amount will be permanently reduced.

Working While Receiving Social Security Benefits at 62:

If you decide to work full-time while receiving Social Security benefits at age 62, your income may affect the amount you receive. The SSA uses an earnings test to determine if your income surpasses a certain threshold, resulting in a reduction of benefits.

Earnings Limit for 2021:

In 2021, if you are under FRA and receiving Social Security benefits, you can earn up to $18,960 per year. If your income exceeds this limit, the SSA will deduct $1 from your benefits for every $2 earned above the threshold. It's important to note that only income from employment is considered, not income from investments or pensions.

Reduced Benefits:

If your income surpasses the earnings limit, your Social Security benefits will be reduced, but only temporarily. Once you reach FRA, the reduction will be recalculated, and you will receive higher monthly benefits to make up for the previous reduction. The SSA refers to this as the "retirement earnings test exempt amount."

Advantages of Working While Receiving Social Security:

Although your benefits may be temporarily reduced, there are several advantages to continuing to work while receiving Social Security at 62:

Increased Total Monthly Benefits:

Once you reach FRA, the SSA recalculates your benefits to account for the reductions made due to working while receiving benefits. This results in higher monthly benefits, which may outweigh the temporary reduction you experienced before reaching FRA.

Improved Financial Security:

By working full-time, you can continue to earn a regular income in addition to your Social Security benefits. This provides greater financial security and flexibility in managing your expenses.

Delaying Claiming Benefits:

If you are able and willing to work full-time until your FRA or even later, you have the option to delay claiming Social Security benefits altogether. Delaying benefits can result in higher monthly payments and may be a wise choice if you have the financial means to do so.

Disadvantages of Working While Receiving Social Security:

While there are benefits to working while receiving Social Security at 62, there are also a few disadvantages to consider:

Temporary Reduction in Benefits:

As mentioned earlier, your benefits may be temporarily reduced if your income surpasses the earnings threshold. This reduction may impact your cash flow or financial plans in the short term.

Additional Tax Implications:

Working while receiving Social Security benefits can also subject you to additional income taxes. If your combined income (Social Security benefits + work income) exceeds a certain threshold, a portion of your benefits may become taxable.

Conclusion:

In summary, individuals can draw Social Security benefits at 62 and still work full-time. However, it is important to consider the impact on your benefits, the earnings limit, and the potential reduction in benefits. Working while receiving benefits provides financial security and flexibility, but it may be beneficial to delay claiming benefits if possible. Consult with a financial advisor or the SSA to make an informed decision based on your individual circumstances.

Frequently Asked Questions

Yes, you can start drawing Social Security benefits at age 62 even if you continue to work full time.

If you choose to receive Social Security benefits at 62 and continue working full time, your benefits may be subject to an earnings test. This test may reduce your benefits if your earnings exceed a certain threshold, but the reduction is temporary and will be recalculated at your full retirement age.

The earnings limit for individuals who start receiving Social Security benefits at age 62 and work full time is $18,960 per year in 2021. If you earn more than this limit, your benefits will be reduced by $1 for every $2 earned above the limit.

Once you reach your full retirement age, the reduction in benefits due to working while receiving benefits at age 62 will be recalculated. The Social Security Administration will adjust your future benefit payments to account for the months in which benefits were withheld or reduced.

Waiting until your full retirement age (typically between 66 and 67, depending on your birth year) to start receiving Social Security benefits can result in higher monthly payments. By delaying your benefits, you can earn delayed retirement credits, which can increase your benefits by 8% per year until you reach age 70.