Everything You Should Know About Collecting Social Security

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The pandemic kicked off the Great Resignation, with many workers retiring sooner and taking reduced Social Security. Then inflation hit and a need to go back to work. What you need to know about income while collecting SSA.

The Great Resignation

The pandemic triggered the so-called Great Resignation which sent millions of Americans walking away from their jobs. While many were younger and this Pew Research Survey lists the various reasons those workers quit, a significant number of older workers opted to retire early for a variety of reasons including, including reduced hours and personal health.

Older workers who quit their jobs

Many older workers, who were nearing retirement, decided to call it quits early. The eligible age to apply for and receive Social Security benefits is 62. However, quitting at age 62 is before reaching the full retirement age (FRA) designated by the Social Security Administration (SSA).

If you were born on January 2, 1960 or later, your FRA is 67 to receive 100 percent of the maximum benefits allowed from your earnings history, AARP reports. From 1956-1959, your FRA is 66.

However, if you take your benefits beginning at age 62, instead of 67, you will receive a reduction in benefits, likely as much as 30 percent. The percentage of the reduction lowers the nearer you are to your FRA.

Inflation and un-retirement

Unfortunately, many who decided to leave their jobs during the Great Resignation, may have not anticipated how quickly and how high inflation was going to spiral.

As a result of inflation, came a need for more income. And now, some workers find themselves needing to un-retire, at least partially, and go back to work for some supplemental income.

However, if you work while receiving Social Security benefits, and if you earn over a certain threshold, it could result in your social security benefits being reduced as long as you are working.

How much can you earn while receiving Social Security benefits?

In the year 2022, if you are working and receiving Social Security benefits, your supplemental earnings limit is $19,560. Essentially, you lose $1 in benefits for every $2 of income you earn over the threshold.

For example, if you work a part-time job and earn $25,000 a year. That amount will put you $5440 over the limit and Social Security will deduct $2720 from your benefits.

For a full explanation see the Social Security Administration publication “How Work Affects Your Benefits.”

No benefits reduction after you reach FRA

The good news is, once you reach your full retirement age (FRA) the Social Security Administration will no longer deduct your benefits – no matter how much you earn.

You only incur a reduction in benefits if you start collecting benefits before your FRA and continue to work.

Even more good news… Let’s say you retired early and kept working while drawing benefits and SSA withheld benefits because you went over the earnings limit. If you keep working after your FRA, Social Security will increase your monthly benefits so that over time you recoup benefits you lost prior due to the prior withholding.