As the name would imply, Social Security retirement benefits were meant to be paid out to beneficiaries after they stop working.
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You can continue to work as long as you want, and you can still collect Social Security benefits. However, you should be aware that continuing to work after claiming Social Security benefits could reduce the amount that you receive, particularly if you have not yet reached full retirement age.
Working Before Full Retirement Age
From the perspective of the Social Security Administration, full retirement age for those born in 1960 or later is 67. If you continue to draw income before you reach full retirement age, the SSA considers you a worker rather than a retiree. As such, some of your benefits may be held back.
As to how many hours you can work and still collect Social Security, this will obviously depend on your hourly wage. For example, if you earn $20 per hour, you can work 978 hours per year before your Social Security benefits are reduced, assuming you haven’t yet reached full retirement age. At 40 hours per work week, that means you can work just over 24 weeks before hitting the earnings limit. If your salary is higher, that number obviously will be adjusted downward.
Things change the year you reach full retirement age. At this point, the amount you can earn before any benefits get withheld is $56,520, as of 2023. Further, benefits are reduced by just $1 for every $3 you earn above the earnings limit.
Working After Full Retirement Age
For some people, working after full retirement age is not the definition of “retirement.” But for others, working after age 67 can be a joy — or a requirement.
20% in payment cuts to the Social Security check!
In more alarming news about the state of Social Security, some experts are warning that up to 20% in payment cuts could be coming as early as 2032, per CNN, unless Congress intervenes with measures to preserve funding for the program.
Upwards of 66 million people currently receive benefits, with the average coming in around $1,691, according to January 2023 data from the Social Security Administration (SSA). Cuts of 20% would see payments shrink to $1,352, which is going backwards from the progress made to increase benefits through cost of living adjustments (COLAs), the latest of which came earlier this year and bumped payment amounts by 8.7%. More than half of retirees say even that higher adjustment isn’t enough to get by on, as GOBankingRates reported.
Social Security has been the subject of debate in recent weeks as the U.S. hit its debt ceiling limit. Despite accusations of politicians being poised to target the program for budget cuts, both President Joe Biden and House Republicans have vowed not to touch Social Security as they battle over national spending.
Social Security Retirement is aiming at 70 years.
A proposal by a bipartisan group of U.S. senators, led by Maine independent Angus King and Republican Bill Cassidy of Louisiana, is among several efforts to overhaul Social Security. It would, among other things, increase the age for receiving full benefits to 70. That is expected to face stiff opposition in Congress and among senior advocacy groups.
“We’re seeing it in France right now,” says Curtis Ray, retirement planner and CEO of MPI Unlimited. “The initial reaction by the public is riots and protests because individuals work so hard, starting at 18, expecting a certain benefit to happen that they were promised. And now they talk about raising the age or cutting the benefits.”
Currently Americans can take early benefits at 62, but the full retirement age is 66 or 67, depending on the month and year of your birth.
Those Who Plan to Take Benefits Early Would See the Most Drastic Impact
A third of recipients take Social Security early at 62, according to the Social Security Administration, and about half take benefits before full retirement age. They are likely facing the biggest changes.
Moving the full retirement age to 70 would also very likely increase the early retirement age, possibly to 65. It also probably means that more workers would die before they qualify.
Those who take Social Security benefits at age 62 lock in monthly benefits of 30% less than if they waited until full retirement age. Waiting until 70 means benefits would increase another 8% annually from full retirement age.
“These people who had these aspirations of retiring as early as possible or having a little bit more free time, a little bit more supplemental income, their plans will be devastated,” Ray says. “They’re going to have to continue to work for another three years, depending on what their health is or have to go without, and that’s even a worse scenario.”
Poljak says another possibility is that they leave the early retirement age at 62, but with a significant reduction in benefits.
Those With Large Retirement Balances May Be Encouraged to Take RMDs Earlier
Even though most people say they will retire between 65 and 67, most retire earlier – at 61 – because of job loss, poor health or caregiving responsibilities. Regan says people should consider spending taxable money from retirement accounts and/or converting to tax-free Roth accounts to help bridge the gap between retirement and reaching the higher retirement age. It would also reduce taxes in later years.
We may loose the social security?
Dear Senators Van Hollen, Sanders, Wyden, and Schumer:
This letter is in response to your August 19, 2020 letter
requesting analysis of the implications of hypothetical legislation that would change the tax rate paid by employers, employees, and self-employed individuals to zero percent for the Federal Insurance Contributions Act (FICA) payroll taxes and Self-Employment Contributions Act (SECA) taxes that fund Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund and Disability Insurance (DI) Trust Fund. This hypothetical legislation would apply for all earnings paid on January 1, 2021 and thereafter.
Social Security id not a Retirement Plan…