Implications of Taking Social Security Before Full Retirement Age

Implications of Taking Social Security Before Full Retirement Age


Deciding when to start taking your Social Security benefits (SSB) is an often-asked question. While there is no simple answer, there are different factors to consider because every situation is unique. One important factor is the age at which you first start taking benefits as it sets the base amount for how much you will receive for the rest of your life, so making an informed decision is critical.

Another factor to consider is your age and whether or not you are still working. The earliest you can take SSB is age 62. If you are considering starting your SSB before you reach what the Social Security Administration (SSA) considers your “full retirement age FRA” (66 or 67 depending on your year of birth), and you plan to continue working, you may not be allowed to take benefits depending on how much money you are earning.

If you plan to continue working and want to take SSB before you reach FRA, you are only allowed to earn up to $22,320 in 2024. This dollar limit increases slightly every year. The simplest examples of earned income are activities where you get a W-2 or self-employment income. If your earned income is above that dollar amount, you will be required to repay SSB received by $1 for every $2 you are above the earned income dollar limitation.

Because of this earned income limitation, we do not recommend taking SSB before FRA if you are planning on still working. In fact, SSA may not allow you to even start benefits before FRA depending on how much earnings you are expecting. It makes no sense to take SSB that you will simply have to repay if you exceed the earnings limitation.

This dollar limitation applies only to YOUR earned income. If you are married and have a spouse that is still working and you want to take SSB before FRA, their earned income does not affect your ability to do so. Only your earned income is considered.

If you want to take SSB before FRA, other income sources such as rental properties, retirement plan distributions, investments, capital gains and other passive income sources DO NOT count towards the earned income threshold. Any income from these sources is ignored by SSA. Only earned income is considered towards the limitation.

Once you reach FRA, the earned income threshold is no longer applicable. After FRA you are allowed to take SSB and have an unlimited amount of earned income.

If you are nearing the age of claiming SSB, it is recommended that your first step is to create your “My Social Security Account” directly on the SSA website. This account will give access to personalized information and estimates on your benefit options. Another resource available is your local SSA office, who should be able to help get you the information you need to make an informed decision. Lastly, if you have any questions or want to discuss when to start pulling your benefits, please contact our office at 307-577-4040.

We hope everyone has had a great fall and stays warm in the coming winter months.