Ignoring Work Rules for Early Benefits
Some people might think it’s a good idea to keep working while also collecting Social Security benefits. But watch out, in order for this to work to your advantage you have to follow certain rules- sadly, not all seniors do.
If you do this before you reach full retirement age, then your benefits will be reduced by $1 for every $2 you make over the annual limit. For 2020, this was $18,240 while for 2021 it’s $18,950.
This changes in the year you reach your full retirement age as your benefits will be reduced by $1 for every $3 you earn over the annual limit. In 2020, the earnings limit was $48,600, but $50,520 for those reaching FRA in 2021.
As you can see, you will most likely see a reduction in benefits, so if you want to go ahead with this plan make sure you account for all the money you’ll miss out on. However, there will be no other reductions once you reach your full retirement age. That’s when your benefit amount will be recalculated to leave out the months when benefits were withheld or reduced.