Nicholas Scheibner, CFP®, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “I’m almost 62. Should I take Social Security now or should I wait?”, originally published on March 20, 2023.
A 60-second read by Nicholas Scheibner, CFP®: First, you need to determine how much you are earning through work. Social Security will reduce your actual benefits received if you earn over the income limit before Full Retirement Age (FRA), which in your case may be age 67.
If you are under full retirement age in 2023, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2023, that limit is $21,240.
For example, if your income is $50,000 for 2023, Social Security will reduce your benefits by $14,380 ($50,000 - $21,240 = $28,760 over the income limit, divided by 2). Depending on your actual Social Security benefit at 62, you may not actually receive a benefit check while you work.
Also – taking Social Security at 62 will permanently reduce your Social Security benefits.
Although you may not be earning enough to save for retirement, delaying Social Security is a form of retirement income planning. Each year you delay Social Security, the increase in benefits is about 8%. That is government-guaranteed increases. That is difficult to impossible to repeat in an IRA investment strategy year-over-year.
It may be best to look at your overall expenses and see if you can make little adjustments to help increase your cash flow. This may allow you to add even a small amount each month to a Retirement Plan. However, make sure you have an emergency savings account built first before you add money to an IRA or 401k.
If you have any further questions, please reach out to your Baron Team.
Disclosure: This is a general communication being provided for informational purposes only. Past performance is no guarantee of future results. Every investment strategy has the potential for profit or loss. This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your financial planning and tax professional for personal advice.