Understanding your Social Security benefits for retirement is often the key to survival for many of us. But, about 70% of us lock in benefits at their lowest amount when 62 years old. Many are still working at this time which creates an unnecessary conflict with your benefits.
The so called “full retirement” age is 66 if born from 1943 to 1954. This gradually increases to 67 if born in 1960 or later. If you take benefits before full retirement and are still working you can trigger a special penalty.
If you take benefits before full retirement (62-65), the government will deduct $1 for each $2 you earn above $15,720 (for 2015). If you earn just $25,000 that year, the deduction is 1/2 of $9,280 or $4,640 that is withheld from your benefit check.
When you reach full retirement age, the government deducts $1 for every $3 above $41,880 (for 2015)–a much higher limit. So, you could earn up to that limit without losing any benefits at all–a much better scenario. Many of us will work part-time to keep things interesting and to supplement our incomes, so you want to set yourself up for the best outcome.