Essential Social Security Rule You Must Know Before Claiming Benefits Early
Understanding the Essential Social Security Rule for Early Benefits
Not knowing this one rule could reduce your monthly Social Security check. While common financial advice is to delay taking Social Security benefits as long as possible, there are plenty of good reasons and circumstances in which it makes sense to claim your benefits early.
This rule could reduce your monthly Social Security check
If you continue to work while collecting Social Security before reaching full retirement age, you're subject to the retirement earnings test.
- If your compensation from a regular job or self-employment exceeds a certain level in any given year, the Social Security Administration takes it upon itself to withhold some of your monthly Social Security benefits.
- For 2024, the two thresholds are $22,320 and $59,520. For every $2 earned above the lower threshold, the SSA will withhold $1 in benefits.
But there's good news
Once you reach full retirement age, the SSA adjusts your benefits as if you'd delayed claiming Social Security for the number of months equal to your withheld benefits. That'll boost your monthly benefit by about 19%.
- Social Security is a more flexible program than many give it credit for. It can work out to claim benefits early even if you're still working as long as you understand how the earnings test will impact your benefits over the next few years.
- If you're still working at 67 with no plans to quit and find you don't need Social Security to supplement your income, you can boost your check even more.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.