It should be noted that there is such a thing as early retirement, and retirement when you reach full retirement age. A common question is at what age you can earn unlimited income on Social Security without affecting your benefits at all?
Note that, when you have not yet reached retirement age, you may be able to start receiving Social Security benefits. However, there are limitations on the benefits you can receive when you have not yet reached full retirement age.
Can I work and earn unlimited income without affecting Social Security at age 62?
You can start receiving early retirement benefits as early as age 62. However, from this age, Social Security retirement benefits may be reduced until you reach full retirement age.
This is a reduction that applies only to the years you are working before you reach full retirement age. You can earn any amount of money at age 62, but your social security benefits may be reduced if you earn more than $21,240, which means that if you earn more than $1,770 per month, you will have a negative effect on your social security benefits.
These maximum income limits do not change depending on your age, if you work before reaching full retirement age. Therefore, the limit will be the same whether you are 62, 63, or 64 years old.
Social Security’s way of reducing benefits will reduce benefits in a complicated way. The agency will withhold several months’ full checks until the reduction is paid.
At what age can you earn unlimited money and still collect Social Security?
If you are already receiving retirement benefits, a special higher earnings limit will apply in the year you turn 67. Age 67 is the full retirement age, and as of the month you reach age 67, you can begin receiving full Social Security benefits without being limited by earned income.
For the self-employed, it should be noted that you can receive full benefits during the year you reach full retirement age. This is provided that you meet what Social Security considers substantial services, which means that you worked in the business for more than 45 hours during the month.
However, if you work in the business more than 45 hours per month before reaching full retirement age, benefits may be reduced.
What is the penalty for early retirement?
The full retirement age is 67 for those born in 1960 or later. Social Security makes you try to make the amount you receive over your life expectancy equal whether you apply at age 62 and get a reduced amount.
At age 67, you will get the standard retirement amount, and when you reach age 70 you will receive a higher amount. The maximum time from which you can start claiming Social Security benefits is 60 months.
In case of early claiming of Social Security benefits, the benefit will be reduced by 30%. The reduction is applied at approximately 0.556% per month, and it should be taken into consideration that the reduction will be permanent.
What is the full retirement age for those born before 1960?
It should be noted that for people born before 1960, the retirement age is slightly lower. For those born in 1956, the full retirement age is 66 years and 4 months. On the other hand, for those born in 1957, it will be 66 years and 6 months.
This age will gradually increase to 67 years of age for people born in 1960 and thereafter. Once the full retirement age is reached, full Social Security benefits can be received, without any limitations on the income received.
In cases where you are a survivor of a retiree, full retirement age will be used for benefits. This will apply even if you are not entitled to retirement benefits.
REFERENCES
- What happens if I work and get Social Security retirement benefits? – FAQ | SSA. (n.d.). https://faq.ssa.gov/en-us/Topic/article/KA-01921
- Attorney, J. M. (2024). Will I get penalized for working while collecting Social Security retirement? www.nolo.com. https://www.nolo.com/legal-encyclopedia/will-i-getpenalized-working-while-collecting-social-security-retirement.html