Seniors are recommended to wait until FRA to enroll in Social Security. If you were born after 1960, you’re 67. Any age can apply for Social Security, starting at 62. Claiming benefits before FRA permanently reduces them. That could be risky since your money could run out, leaving you with only those perks.
A senior citizen who is calculating her charges (Source: The Motley Fool)
Social Security Earnings-Test Limit
Still, anyone may file for Social Security before the 2024 FRA. Your motivations may range from wishing to return to a part-time job to traveling while you’re still fit. But early Social Security claims may not only cut benefits permanently. If you work too much and earn too much, your already reduced benefit may be withheld. Even with a normal job, you can get Social Security. After FRA, work-related earnings won’t affect Social Security payments. If you claim Social Security early while working, you must consider the earnings-test limit, which changes annually. The 2024 earnings-test maximum is $22,320. Earn more than that and risk losing $1 in Social Security for every $2 over the limit.
You won’t lose all withheld advantages. Once you achieve FRA, that money will be applied to your benefits. Claiming benefits early reduces your Social Security payouts for life. If you lose a lot of revenue owing to exceeding the earnings-test limit, it may not be worth it. Workers who start collecting Social Security before FRA in 2024 but don’t reach FRA in 2024 face the $22,320 earnings-test limit. If you achieve FRA next year, you can make $59,520 without losing benefits. From then, $1 in Social Security may be withheld per $3 of wages over the cap.
If you plan to collect Social Security in 2024 but won’t achieve FRA, you should know the rules. You can ignore the earnings-test limit if you’re sure you won’t work. If you plan to work, you may wish to limit your hours and income or delay your Social Security claim if you can afford it. It may make sense to access your funds for a year or two to increase your lifelong monthly payout.
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