What Happens If You Get Social Security Benefits Early?

If you get your Social Security benefits early, you can expect to receive less than your full primary insurance amount. If you continue to earn money after you begin claiming your benefits, your earnings above a certain amount will lead to reduced benefits.

Early, in this case, means you have claimed your Social Security benefits as early as age 62 instead of your full retirement age of 67 (for people born in 1960 or later). If you collect your benefits at your full retirement age, you will receive the full amount you are eligible to receive, which is your primary insurance amount. This is the payment calculated based on the amount of money you earned in your 35 highest-earning years and the amount you will receive each month in your Social Security check.

Early Retirement Reduces Your Social Security Benefits

By choosing to get your Social Security benefits early, you will be agreeing to receive your benefits at a reduced amount each month.

When you choose to get your benefits early, your benefit is reduced by 5/9 of one percent for the first 36 months and by 5/12 of one percent for the remaining months until you reach full retirement age. So if you claim your benefits at age 62, five years before your full retirement age, your benefits will be reduced by 30% (5/9 of one percent for 36 months, then 5/12 of one percent for 24 months).

Your Earnings Before Full Retirement Will Reduce Your Benefits

If you were born between January 1, 1959, and January 1, 1960, your full retirement age is at 66 years and 10 months old. If you choose to claim your benefits early and are below the full retirement age for the entirety of 2021, Social Security will deduct $1 from your benefits for every $2 you earn above $18,960. If you will reach full retirement age during 2021, Social Security will deduct $1 from your benefits for every $3 you earn above $50,520. 

To keep this money from you, Social Security will withhold your benefits for as many months as your reduction is worth, depending on how much you earned over the amount. You can expect to receive any additional withheld money the following year. Let’s say you earn $23,930 in 2021, $4,970 over the $18,960 limit. Social Security will withhold your benefit payments from January through May to withhold $2,485 from your benefits. You will receive the remaining $510 withheld from May during the following year.

Once you reach full retirement age, you can work and earn as much as you want without your Social Security benefits being affected. The only thing they will make a difference for at that point would be your income taxes. Once you make over a certain amount, a portion of your monthly Social Security benefit will count toward your income tax, which means you will have to pay more in taxes.

For more information about early retirement and how your benefits may be affected, contact the Federal Employee Service Association.

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