I started receiving Social Security benefits early at age 62. Back then, full retirement age was 65. At what age will I not be penalized for additional income?
— Early Retiree
Dear Retiree,
If you’re still working while receiving Social Security benefits, your earnings can affect the amount you receive in benefits up until your full retirement age (FRA). That age is based on when you were born, because it’s been increased over the years as life expectancy and funding for the program have changed.
For anyone born:
- Before 1943, the FRA was 65.
- Between 1943 and 1959, the FRA is 66, plus two months for each birth year between 1955 and 1959.
- In 1960 or later, the FRA is currently 67.
There have been recent calls from some Republican representatives in Congress to raise the retirement age again. Any plan that would do so would likely follow the birth-year model of earlier increases to avoid impacting folks who are close to reaching FRA.
After you reach full retirement age, your earnings will no longer affect your benefit amount.
Until then, your yearly benefits will be reduced by $1 for every $2 you earn in income over the limit, which is $22,320 per year for 2024.
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Once you reach full retirement age, your monthly benefits will be recalculated so you get credit for any months your benefits were reduced while you were working. That means the total amount you receive over time doesn’t change just because you’re earning income; your monthly benefits are just reduced temporarily.
Dana Miranda is a Certified Educator in Personal Finance® and author of YOU DON’T NEED A BUDGET. She writes Healthy Rich, a newsletter about how capitalism impacts the ways we think, teach and talk about money.
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