1. Home
  2. Financial Planning
  3. Early retirement & penalty for earning wages?

Early retirement & penalty for earning wages?

I've been trying to rapidly catch up on retirement info for various reasons lately. It was my impression that of one retired before their "full retirement age" there was an income limit from wages to be considered. Looking around the Social Security web pages it appears that if one retires between age 62 and the applicable full retirement age of 66 the retiree starts to be penalized once he earns approximately $14k.

Suddenly someone tells me a recent change in the law removes that penalty.

Does anyone know what law that may be, the person telling me this didn't know any more details. I'm skeptical that what I've described in the first paragraph has been substantially changed. I found the details on the SocSec web page tonight.

I'm trying to talk somone out of taking early retirement before FRA just to make up a small shortfall in monthly income due to a job change. If you have any relevant insight into this topic please reply. I had expected to follow this topic more closely in a few years, not now.

Reply to
tscottme
Loading thread data ...

No changes here. Suggest you google on "social security earned income limitation". For more,

formatting link

-HW "Skip" Weldon Columbia, SC

Reply to
HW "Skip" Weldon

Not unexpectedly, it's more complicated than that. Yes, your benefits are reduced somewhat once you go over the limit prior to full retirement age. However, once you *do* reach full retirement age, those funds that you did not receive earlier will cause a corresponding increase in your benefits received later. Additionally, while you continue to work, you continue to pay FICA tax, which can also increase your eventual benefit. Each person's situation is different.

Reply to
bo peep

The penalty used to extend to age 70. There was a change, maybe five years ago, that eliminated the penalty between full retirement age and 70. Perhaps that's what they were talking about. -- Doug

Reply to
Douglas Johnson

I know of know "income penalty" for retiring early.

There are penalties for having too much income if you collect a SS check.

If your income calculated as 50% of SS+other income is larger than

44k, then the SS portion of the income is subject to tax. It could be up to 85% of the SS check is subject to tax, depending on your situation.

For example:

42k of SS benefits= all benefits tax free 42k of SS benefits+$10k of income from retirement accounts!+10144k, so the whole 44k of SS is now subject to taxes based on current tax law.
Reply to
jIM

edit- should read A PORTION of the SS is subject to tax (50% or 85%).

Reply to
jIM

There is a reduction of your SS if you are not of full retirement age and have more than a certain amount of FICA income. I believe there are two levels of benefit reduction. The question was to this portion of the regulation, rather than the tax implications.

Elizabeth Richardson

Reply to
Elizabeth Richardson

I'd like to thank everyone for their prompt and relevant reply. My language may have not been as clear as it should have been.

Reply to
tscottme

Or you might of heard of suspension for one year of mandatory IRA withdrawal in 2009.

Reply to
rick++

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.