Most people are familiar with the fact that if you claim social security benefits before you hit your full retirement age you can make too much money and have your benefit reduced.
For 2023 that annual amount is $21,240. But what if you plan to retire mid-year and already made that amount? Will you not receive benefits until the following year?
That answer is not necessarily. If you retire before your full retirement age, you get a higher income exemption for the year that you plan to retire. That number is $56,520 in 2023. So as long as you haven’t made more than that in the year you start to claim benefits, you shouldn’t have to worry about any reductions.
If you plan on part time work after claiming, then the reduction goes by monthly income and your limit is $1770 per month to keep your full benefit payment.
This situation is a bit complicated, but remember that this earnings test goes away at full retirement age and at that point you can earn whatever you want while claiming benefits.
If you find yourself in this situation, don’t hesitate to give us a call so you can know what income to expect when that retirement day finally comes.