Anybody Have The Upside/Downside To 'You Can Work And Get Social Security At The Same Time' - SSA

[WillyT]

You can work and get Social Security at the same time

You can work while you receive Social Security retirement (or survivors) benefits. When you do, it could mean a higher benefit for you in the future. Higher benefits can be important to you later in life and increase the future benefit amounts your family and your survivors could receive.

While you are working, your earnings will reduce your benefit amount only until you reach your full retirement age. After you reach full retirement age we recalculate your benefit amount to leave out the months when we reduced or withheld benefits due to your excess earnings.

Link: http://www.ssa.gov/retire2/whileworking.htm

********************************************************************************

Will you receive higher monthly benefits later if benefits are withheld because of work?

Yes. If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

As an example, let us say you claim retirement benefits upon turning 62 in 2011 and your payment is $750 per month. Then, you return to work and have 12 months of benefits withheld. We would recalculate your benefit at your full retirement age of 66 and pay you $800 a month (in today’s dollars). Or, maybe you earn so much between the ages of 62 and 66 that all benefits in those years are withheld. In that case, we would pay you $1,000 a month starting at age 66.

Link: http://www.ssa.gov/pubs/10069.html#increase

********************************************************************************

Full/Partial Benefit Breakdown By Age: http://www.ssa.gov/retire2/retirechart.htm

Does it make more sense to start taking benefits at 62 and keep working until Medicare kicks in, or should you wait until 'Full Retirement Age' and grab the bigger payout?

And yeah, I know it depends on an individual's circumstances, just wondering in general, what the smarter move is.

:shrug:

Thanks in advance!

:hi:

[mysuzuki2]

1. The answer to that question basically depends on when you are going to die.

If you plan on living a very long time, wait and let the benefit increase. If you are going to die relatively young, take it as soon as possible. Now, obviously most people cannot really adopt that strategy. So, my advice is to take it when you need the money. If you're doing ok without it, wait and let the amount increase.

[RebelOne]

2. I began collecting SS benefits when I turned 65,

and I was still working. It did not affect my tax return because you do not pay taxes on SS benefits. I was laid off my job in 2010. I collected SS and unemployment benefits for that year. I also got severance pay for 6 months. When I filed my taxes for 2010, I get a tax return of $962. I was shocked because I had always had to pay every year.

[Ruby the Liberal]

4. SS Benefits are indeed taxed

It is on a sliding scale and based on MAGI (Modified adjusted gross income)

http://www.ssa.gov/planners/taxes.htm

[sinkingfeeling]

6. If you income other than just Social Security, you may have to pay taxes.

Taxable Social Security
Social Security benefits are taxed depending on your total income from all sources. Here's how to calculate how much of your Social Security benefits is taxable.
Provisional Income
Provisional income is your total worldwide income, including tax-exempt income, plus half of your Social Security benefits.

Base Amounts
The following base amounts are used in figuring your taxable Social Security:

Filing Status Base Additional
Single $25,000 $34,000
Head of Household $25,000 $34,000
Married Filing Jointly $32,000 $44,000
Married Filing Separately $0*
Qualifying Widow(er) $25,000 $34,000


Taxable Social Security Benefits
If your provisional income is below the base amounts for your filing status, then your Social Security benefits are completely non-taxable.

If you provisional income is between the base amount and the additional amount, then half of your Social Security benefits over the base amount are taxable.

If your provisional income is over the additional amount, then $4,500 (or $6,000 if Married Filing Jointly) plus 85% of your Social Security benefits over the additional amount are taxable.

The taxable portion of your Social Security benefits cannot exceed 85% of your total benefits.

http://taxes.about.com/od/income/qt/Social_Security.htm

[TBF]

3. My mom is over 65 and works part time -

She is still fairly healthy and likes to get out of the house. I do know she has a "limit" on how much she can earn without her check going down so she tracks how many hours she works. But I don't know the details of it ...

[kestrel91316]

5. I happen to think if you are below a certain modest income level, you should

be able to work AND collect SS before you are ancient. My grandmother had to quit her P/T job when she was in her late 60's because she wasn't allowed to earn money while on SS. Once she hit, oh, her 70's then they said it was ok to have a tiny income.

They were already poor, and that nonsense made them poorer, unnecessarily.

[MineralMan]

9. Things have changed since your grandmother's time.

Once you're at full retirement age, you can earn as much as you like without your monthly SS payment being reduced. If you start drawing SS before full retirement age, there's a maximum amount you can earn before they start whacking at your payment. How much depends on several factors. In my case, it was almost $14,000 last year, so I worked and earned just under that.

The rules have changed. You can learn about them on the SS web site. It's not your grandmother's Social Security now.

[MineralMan]

7. You have to do the calculations to see. First, you have to

make an educated guess about how long you'll live. Then the calculations are pretty easy.

Before your full retirement age, you can earn a certain amount without it affecting your payments. In my case, last year, I could earn as much as $14,000 per year and still receive my full payment. Now that I'm 66 and at full retirement age, I can work as much as I wish and earn as much as I wish, and my SS monthly payment won't be reduced. Of course, I'll have to pay taxes on my income and, if the income exceeds a certain amount, I'll also be taxed on my SS payments as well. It's a balancing act.

If you earn more than the maximum before you reach full retirement age, they will reduce your monthly payment and that will cause an increase in your payment after full retirement age. That's a complicated calculation to make, and if you're earning well, you'll probably find it better to wait to start drawing SS. In my case, I needed the SS income, starting at age 62. I earned right at the maximum I could until this year, when I ramped up my little business to earn somewhat more. If things work out, it may end up being quite a bit more. But, I balanced income and SS payments to avoid the decrease in SS.

You can do a lot of the calculations on the SS web site, but not all.

The system is designed to have the same total lifetime payout either way. If you think you will not live into your eighties, as I think, then it usually makes sense to begin receiving SS payments at 62. If you anticipate a long life, you may want to wait and maximize those payments on a monthly basis. Every situation is different, and there's no single answer.

[elocs]

8. I've crunched the numbers for myself and found that if I retire at 62 (3 years from now)

it would take me until I was 78 to make up the difference compared to if I waited until age 66 and created a larger monthly payment.

I am dirt poor now and retiring at 62 I would have as much money coming in as I do now, plus I could work if I wanted with as little as I make.

I work to live, I don't live to work. Very few people will be on their deathbed and wish that they had spent more time at work. I am fortunate, strangely enough, with being poor and having so little and being used to getting along with so little that it will allow me to retire at 62.

[MineralMan]

11. That was my decision.

My full retirement age was 66, which I am this year. So, for four years, I have received payments. The amount, combined with some limited additional income made all the difference. Like you, my calculations came out so it would have taken until I was almost 80 for there to be a difference in the total amount I would receive Now, I'm working more, since I can. My social security check now goes almost entirely to pay my wife's health insurance, which is shockingly high. She's uninsurable, so she's stuck with what she has. Fortunately, my new little business is more than making up for that.

Everyone has to crunch the numbers. It's an interesting thing to do. It was an easy decision for me.

[elocs]

15. Also, when I turn 65 I will get a small pension from the Teamsters ($200/month)

that would make up most of the difference between retiring at 66 compared to 62.

I have just me and I am in good health and so my plans are to eventually get myself a little teardrop trailer (mostly a sleeping pod) to pull behind my little car and become a nomad, traveling and seeing the country, staying where I like for as long as I like. Not having to pay rent or utilities or home insurance will make that very affordable.

[EC]

10. As long as you make below

14,400. yr. Then when you're of age you can apply for your benefits if they are more than your survivor benies.

[hfojvt]

12. by my calculations, it pays to retire at 62, ymmv

Here's my math.

At age 62, I am promised $599 a month
at age 67, I am promised $880 a month

Lost benefits = $599 * 12 * 5 = $35,940 (plus interest, although if I am spending all of it, then there really is no interest)

gain per month after 67 = $281

break even point = $35,940/$281 = 128 months, about ten years, making me 77 and 8 months.

Although, I thought in the past I got 80. Hmm.

In 2006, my SS report said this
age 62 = $656 a month
age 67 = $993 a month

Well, I don't get more than 133 months for any of the last 3 reports, so maybe I was figuring it with interest. In theory, the lost interest on that first year of benefits is $575 over the next 4 years at 2% interest. Interest is typically used to calculate present value and future value.

In my case, since I started working part time in 2006, I may need to keep working past 62 because I may not be able to live on those benefits.

[exelwood]

13. Exactly...

...at least for men. It makes sense to take early retirement if you can afford to because it takes about nine years to "catch up" at full retirement pay. With my fatboy life expectancy i would have been crazy to wait. :)

I hope all this playing games with people's lives comes to an end soon and everyone get to keep their retirement as promised. I couldn't make it without my SS money.

[eilen]

14. My Dad retired at 62. He would have never drawn a

penny if he had decided to wait until he turned 70. He died 5 days before his 70th birthday. At 62 he had no idea he would get lung cancer except that he had a good chance of it being he smoked. However, his parents both smoked their entire adult lives and they lived well past 80. There was no cancer running in the family except for his brother who was exposed to Agent Orange in Vietnam and who did not smoke.