How much am I able to earn from an employer if I opt to take my Social Security at age 62 next year?
– Glenn
To be very clear, you can earn as much money as you want while collecting Social Security benefits. The issue that most people are concerned with is having their benefits reduced for earning more than the annual earnings limit.
In 2024, you can earn up to $22,320 (which is up from $21,240 in 2023) without seeing any reduction in your Social Security benefit.However, there are some important things to keep in mind when claiming Social Security before you reach full retirement age. (And if you need more help planning for Social Security, consider working with a financial advisor)
Social Security Earnings Limit
If you claim your benefit before hitting your full retirement age, you’ll be subject to the earnings limit. The specific amount adjusts each year, but for 2024 is $22,320 (which is up from $21,240 in 2023).
If you earn more than that amount, your monthly benefit is reduced by $1 for every $2 you earn above the limit. So, if you earn $22,322, your monthly Social Security check would be $1 less than it would be otherwise. Earning less than that limit won’t affect your benefits at all.
However, things change a little bit in the calendar year in which you’ll reach your full retirement age. For people who hit their full retirement age in 2024, the earnings limit increases to $59,520 (which is up from 56,520 in 2023). On top of that, your benefits are only reduced by $1 for every $3 you earn above the limit. (And if you need more help navigating the complexities of Social Security planning, this tool can help match you with potential advisors.)
Here’s what you should know about the earnings limit:
- The limit only applies if you claim Social Security before reaching your full retirement age.
- The earnings limit increases (to $59,520 in 2024) for the calendar year in which you’ll reach full retirement age.
- Starting in the month you hit your full retirement age, there is no longer an earnings limit. Your benefits will no longer be reduced regardless of how much income you have.
- The earnings limit specifically applies to earnings from wages or self-employment. Your pension, annuities and investment income do not count toward it.
Special Rule for Your First Year of Retirement
What happens if you retire mid-year and have already exceeded the earnings limit? There’s a special rule you’ll want to keep in mind for your first year of retirement, assuming you claim your benefits before reaching full retirement age.
Suppose you’re 62 and you retire after working a portion of the year, say in August, and you’ve already earned $45,000. Despite exceeding the annual limit by$22,680, your Social Security benefit won’t be reduced as long as any additional monthly earnings are less than or equal to 1/12th the 2024 earnings limit.
In other words, you’ll receive your full payment each month assuming you don’t make more than$1,860 that month. (And if you need more help planning for Social Security, talk to a finanical advisor.)
The Reduction Is Temporary, and You Get it Back
It’s worth noting that the earnings limit reduction is temporary and you end up getting that money back over time. When you reach full retirement age, your benefit increases (although not right away) to account for the reduction you had due to the earnings limit.
Don’t confuse the early filing reduction with the earnings limit reduction. Claiming Social Security early will result in a permanent reduction in benefits compared to waiting until your full retirement age. (And if you need picking the right time to claim Social Security, consider working with a financial advisor.)
Next Steps
Remember that your highest 35 years of earnings determine your benefit amount. If you continue to work while receiving your Social Security payments you may be increasing your benefit. If you are earning more than any of your previous highest 35 years then your primary insurance amount will increase.
Tips for Finding a Financial Advisor
- Finding a financial advisordoesn’t have to be hard.SmartAsset’s free toolmatches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals,get started now.
- Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options,these are the questions you should ask an advisorto ensure you make the right choice.
Brandon Renfro, CFP® is a SmartAsset financial planning columnist and answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Please note that Brandon is not a participant in the SmartAdvisor Match platform.
Photo credit: ©iStock.com/Nes, ©iStock.com/FG Trade
FAQs
If you claim your benefit before hitting your full retirement age, you'll be subject to the earnings limit. The specific amount adjusts each year, but for 2024 is $22,320 (which is up from $21,240 in 2023). If you earn more than that amount, your monthly benefit is reduced by $1 for every $2 you earn above the limit.
How much money can you make working if you collect Social Security at 62? ›
Starting in the month you hit your full retirement age, there is no longer an earnings limit. Your benefits will no longer be reduced regardless of how much income you have.
Can I draw Social Security at 62 and still work full time after? ›
You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.
How much can I earn if I retire at 62 in 2024? ›
In 2024, if you're under full retirement age, the annual earnings limit is $22,320.
At what age can you earn unlimited income without affecting Social Security? ›
How much can you earn and still get benefits? later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.
How much money can I earn without affecting my Social Security? ›
If you are full retirement age and earning money, no worries. You're good to go, no penalties involved. However, if you are younger than full retirement age and make more than the yearly earnings limit, which for 2024 is $22,320, the Social Security Administration (SSA) reduces your benefit.
How many hours can I work if I retire at 62? ›
Regardless of the reasons you might have, the good news is that once you reach full retirement age, you'll no longer suffer any penalties for working. You'll be entitled to your full monthly Social Security benefit regardless of how many hours you work.
What is the average Social Security check at age 62? ›
According to recently released data from the SSA's Office of the Actuary, just over 590,000 retired-worker beneficiaries were receiving $1,298.26 per month at age 62, as of December 2023. That compares to about 2.11 million aged 66 retired-worker beneficiaries who were taking home $1,739.92 per month.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
How do I get the $16728 Social Security bonus? ›
There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits.
What is the lowest Social Security payment at age 62? ›
- Social Security's special minimum benefit pays at least $49.40 per month in 2023 and $50.90 in 2024.
- Social Security's special minimum benefit tops out at $1,033.50 per month in 2023 and $1,066.50 in 2024.
- You'll receive 100% of the benefit if you file at full retirement age or later.
At full retirement age, you're still eligible for full benefits. If you're at full retirement age but choose to return to work, your benefits won't be affected. The SSA adds that the benefit amount will be recalculated to “leave out the months when [they] reduced or withheld benefits due to your excess earnings.”
How much money can I make without affecting my Social Security in 2024? ›
If you start collecting Social Security before full retirement age, you can earn up to $1,860 per month ($22,320 per year) in 2024 before the SSA will start withholding benefits, at the rate of $1 in benefits for every $2 above the limit. In 2023, the maximum exempt earnings were $1,770 per month ($21,240 per year).
What is the maximum a person can earn while on Social Security? ›
After the year in which you hit full retirement age, there is no limit on what you can earn while collecting Social Security retirement benefits.
Can I get a tax refund if my only income is Social Security? ›
You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.
How much does the average person make on Social Security at age 62? ›
If people born after 1960 claim their benefits the month they turn 62, they'll get only 70% of what they would have received had they waited until the full retirement age of 67. The average monthly payment of $1,782 drops by 30% during the first month of eligibility to $1,247.40.
How do you get the $16728 Social Security bonus? ›
There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
Is it better to take Social Security at 62 or 67? ›
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
