Social Security while still working?

[jetaylor]

I just turned 66, have a good job with great healthcare benefits, and just discovered I may have been wrong about linking social security payments to retirement. It appears I can continue with my current job AND file to receive social security at the same time! Perhaps most of you are saying, "well, duh!," but this is a new concept to me. Please let me know if this is correct. Since I'm at full retirement age (fixed earlier sentence), there's not limit on earnings outside of SSA that would reduce my SSA payments. recent reading says 85% of those SSA payments will be taxable, but that's OK with me (my normal job income is 100% taxable, so SSA would just be more income that gets taxed). And I can turn down Medicare B and keep my employer's healthcare. I read about not being able to use a healthcare savings account (HSA), but that's OK because I use a flexible savings account (FSA) annually. It appears that the only downside is wanting to take more time off than the vacation my employer provides, but I know they will also give me a few weeks of unpaid time off every year in addition to normal vacation. This just looks too good to be true, so what am I not seeing?

[davebarnes]

"Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments."
You have this backwards.
The earnings penalty goes away at FRA. Below that, it is hellacious (in my opinion).

"For the year 2019, this limit on earned income is $17,640 ($1,470 per month). The amount goes up each year. If you are collecting Social Security retirement benefits before full retirement age, your benefits are reduced by $1 for every $2 you earn over the limit."

[ivinsfan]

Quote:

Originally Posted by jetaylor I just turned 66, have a good job with great healthcare benefits, and just discovered I may have been wrong about linking social security payments to retirement. It appears I can continue with my current job AND file to receive social security at the same time! Perhaps most of you are saying, "well, duh!," but this is a new concept to me. Please let me know if this is correct. Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments. recent reading says 85% of those SSA payments will be taxable, but that's OK with me (my normal job income is 100% taxable, so SSA would just be more income that gets taxed). And I can turn down Medicare B and keep my employer's healthcare. I read about not being able to use a healthcare savings account (HSA), but that's OK because I use a flexible savings account (FSA) annually. It appears that the only downside is wanting to take more time off than the vacation my employer provides, but I know they will also give me a few weeks of unpaid time off every year in addition to normal vacation. This just looks too good to be true, so what am I not seeing?

Were in born in 1954 or earlier your FRA is 66. Why do you think you are not at Full Retirement Age..

[Mdlerth]

Quote:

Originally Posted by jetaylor Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments.

No, you have it exactly backwards. If you are NOT at full retirement age, there IS a limit of $17,640 that you can earn without it affecting your SS payments, assuming you file for them.

Once you reach your FRA, that 17,640 limit disappears and you can earn as much as you want.

Quote:

recent reading says 85% of those SSA payments will be taxable, but that's OK with me (my normal job income is 100% taxable, so SSA would just be more income that gets taxed).

Up to 85% of SS payments will become taxable, but it depends on your total taxable income.

Just a nosy question or two: Are you still working full time? If so, you might want to crunch a few numbers first before drawing SS while you're still getting a regular paycheck.

[jetaylor]

Mdlerth, you're absolutely correct. I am at full retirement age. Striking the first not: "Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments."

[Mdlerth]

Okey dokey then. You're free to enjoy your SS benefit all you want, penalty-free.

But I will note that there has been some minor controversy on these pages regarding the optimum time to begin collecting that benefit. And, of course, by "minor" controversy I mean "MAJOR" controversy. Probably no topic stirs more debate here.

So I'll toss a little kerosene on the coals by asking again, why you want to commence your SS if you're still going to be drawing a regular paycheck? There are upsides and downsides, so I'm curious what, for you, drives the decision?

[jetaylor]

Additional info: I am still working full time and would like to continue that. Other than the additional income tax, it seems reasonable to activate the social security payments, since after full retirement age it is just treated as additional income that gets taxed (but IS additional income!). My wife hasn't worked, but since she's also 66 I've read that she will also qualify for a spousal SSA payment (up to 1/2 of mine?). Just seems like it possible to kind of "get a large raise" without bothering my current employer.

Driving the decision:

Thinking that I will be fine investing (or sometimes giving or spending) the SSA extra income now rather than waiting for a larger SSA payment later (knowing that it grows 8% per year if I delay). I've been fine self-directing my IRA over the years, but I won't try to justify that here.

I've just always linked SSA payments with retirement, and never thought about decoupling: getting SSA at 66 and not retiring until there is some reason I have to.

[ivinsfan]

Since you are 66 and your wife is 66 I think it makes sense to pull the trigger now.. Your DW benefit will not get any bigger at this point in time, it's frozen at 50% of your FRA payment . At the very least your wife needs to apply, I believe you are grandfathered into the file and suspend rules. Your wife cannot collect a check until you file a claim.

[joeea]

Quote:

Originally Posted by jetaylor I just turned 66, have a good job with great healthcare benefits, and just discovered I may have been wrong about linking social security payments to retirement.

If you believed that you could only begin collecting social security benefits once you retired, then you have indeed been wrong.

Quote:

It appears that the only downside is wanting to take more time off than the vacation my employer provides, but I know they will also give me a few weeks of unpaid time off every year in addition to normal vacation.

That's a downside of working, and has nothing to do with collecting or not collecting your social security benefits.

Quote:

This just looks too good to be true, so what am I not seeing?

You might not be seeing a potential advantage to waiting until 70 to begin collecting your benefits.

Check out https://opensocialsecurity.com/

It's free and easy to use. And it can help you decide an optimal claiming strategy.

Quote:

My wife hasn't worked, but since she's also 66 I've read that she will also qualify for a spousal SSA payment (up to 1/2 of mine?).

If she's never worked at all, that might make sense.

But she can only file for spousal benefits if you have filed. And if you file now and you predecease her, her survivor benefits will only be equal to your current benefit. It might be better if you waited until 70 and then she would be entitled to your maximum, age 70, benefits as your survivor.

The tool I linked above can help you see how that might work out.

[joeea]

Quote:

Originally Posted by cbo111 Pardon my ignorance, but approaching the ripe old age of 62, I am only now becoming interested in this thing called social security benefits so I have not done a lot of research. DW and I currently receive about 70K in pensions. Are pensions treated the same as regular work income when it comes to reduced benefits over 17.6K? If so, I may wait until FRA to claim.

No pensions wouldn't be counted in that regard. Only earned income.

You should read up on all the aspects regarding social security at ssa.gov

And you should investigate your particular situation using https://opensocialsecurity.com/ before deciding if 62 is the right age or not.

[joeea]

Quote:

Originally Posted by ivinsfan Your DW benefit will not get any bigger at this point in time, it's frozen at 50% of your FRA payment .

That's true of the spousal benefits.

That's not true of survivor benefits.

[ivinsfan]

Quote:

Originally Posted by joeea That's true of the spousal benefits. That's not true of survivor benefits.

So far survivor benefit hasn't been mentioned here. I think it's easier to understand if you simply address the original question.In fact my answer was accurate.

[joeea]

Quote:

Originally Posted by ivinsfan So far survivor benefit hasn't been mentioned here. I think it's easier to understand if you simply address the original question.In fact my answer was accurate.

I'm sure you knew what you meant. It was accurate based on your particular assumptions.

For others (particularly those who are just learning most of the aspects of social security benefits), they might have gotten confused when you said only "Your DW benefit ", or might not even realize that there is a difference between spousal benefits and survivor benefits.

[ivinsfan]

Quote:

Originally Posted by joeea I'm sure you knew what you meant. It was accurate based on your particular assumptions. For others (particularly those who are just learning most of the aspects of social security benefits), they might have gotten confused when you said only "Your DW benefit ", or might not even realize that there is a difference between spousal benefits and survivor benefits.

The only thing more confusing then an SS thread is an ACA thread.A spousal benefit is pretty straightforward. I'm sure the OP will ask questions if he needs to.

[ChrisC]

Quote:

Originally Posted by jetaylor Mdlerth, you're absolutely correct. I am at full retirement age. Striking the first not: "Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments."

That's not entirely correct for others. It's a little more nuanced for those receiving SS benefits before full FRA. In the year you turn 66-FRA for those receiving benefits, you're still subject to the earnings limitation for part of the year you weren't 66:

If you reach full retirement age during
2019, we must deduct $1 from your
benefits for each $3 you earn above
$46,920 until the month you reach full
retirement age.

https://www.ssa.gov/pubs/EN-05-10069.pdf.

In my case, I turn 66 in December and started benefits at 64 so I'm subject to the earnings limiations from January to November. But I think in your case, if you file after you reach FRA, the earnings limitation does not apply to you. I probably confused others and shouldn't have posted this.

[joeea]

Quote:

Originally Posted by ivinsfan The only thing more confusing then an SS thread is an ACA thread.A spousal benefit is pretty straightforward. I'm sure the OP will ask questions if he needs to.

Sometimes you don't know what you don't know.

[Perryinva]

All good answer here. Tough decision as to file for spousal plus your own at 66 (your FRA, full retirement age) or wait to increase your own at the cost of 1 1/2 times per year as longevity insurance for your spouse. In general, filing at FRA when spouse has no earnings is the better solution. If any other income including tax exempt interest plus 1/2 your SS benefits are over $34k, then you will pay federal tax on 85% of your SS income which may trigger the Tax Torpedo and bump you in to the next tax bracket. Just a consideration to remember.

[Offgrid Organic Farmer]

The OP is 66 and he is still working.

Not exactly an 'early retirement'.

[Independent]

Quote:

Originally Posted by davebarnes "Since I'm not at full retirement age, there's not limit on earnings outside of SSA that would reduce my SSA payments." You have this backwards. The earnings penalty goes away at FRA. Below that, it is hellacious (in my opinion). "For the year 2019, this limit on earned income is $17,640 ($1,470 per month). The amount goes up each year. If you are collecting Social Security retirement benefits before full retirement age, your benefits are reduced by $1 for every $2 you earn over the limit."

It's not as bad as it sounds because

Quote:

Will you receive higher monthly benefits later if benefits are withheld because of work? Yes. If some of your retirement benefits are withheld because of your earnings, your monthly benefit will increase starting at your full retirement age to take into account those months in which benefits were withheld. As an example, let’s say you claim retirement benefits upon turning 62 in 2019, and your payment is $942 per month. Then, you return to work and have 12 months of benefits withheld. We would recalculate your benefit at your full retirement age of 66 and 6 months and pay you $1,007 per month

http://www.ssa.gov/pubs/10069.html

I believe the recalculation essentially changes your presumed start date. In the example above, they recalculate your benefit to what it would have been if you had retired at 63 instead of 62.