Can You Start Collecting Social Security While Still Working?
Social Security is a crucial part of retirement planning for many Americans, offering a steady income stream during their golden years. However, one common question that arises is whether it’s possible to start collecting Social Security benefits while still working. The answer is yes, but there are certain factors to consider before making this decision.
Understanding Social Security Benefits
Social Security benefits are calculated based on your earnings history, and you can start collecting them as early as age 62 or as late as age 70. The amount you receive each month is determined by the Social Security Administration (SSA) using a formula that takes into account your highest 35 years of earnings. The longer you wait to collect benefits, the higher your monthly payment will be, as the SSA applies a delayed retirement credit.
The Impact of Working on Social Security Benefits
If you decide to start collecting Social Security benefits while still working, there are a few things to keep in mind. First, if you’re under full retirement age (which varies depending on your birth year), your benefits may be reduced if your earnings exceed a certain limit. For those born in 1960 or later, the limit is $18,960 in 2021. This means that for every $2 you earn above the limit, your Social Security benefit will be reduced by $1.
Delaying Benefits for a Higher Payment
One advantage of waiting to collect Social Security benefits while still working is that you may be able to increase your monthly payment. As mentioned earlier, delaying benefits until age 70 can result in a higher monthly payment due to the delayed retirement credit. If you’re still working and earning a good income, it may be beneficial to wait until you reach full retirement age or even age 70 to maximize your benefits.
Other Considerations
It’s important to note that if you’re receiving Social Security benefits and continue to work, you’ll need to report your earnings to the SSA. Failure to do so can result in an overpayment of benefits, which may need to be repaid with interest.
Seeking Professional Advice
Deciding whether to start collecting Social Security benefits while still working is a personal decision that depends on your individual circumstances. It’s a good idea to consult with a financial advisor or a Social Security expert to understand the potential impact on your retirement income and overall financial plan.
In conclusion, it is possible to start collecting Social Security benefits while still working, but there are important considerations to keep in mind. By understanding the rules and seeking professional advice, you can make an informed decision that aligns with your retirement goals.
