I recently learned that many people approaching retirement did not know all of the options available to them in terms of receiving their Social Security Retirement benefits. With so many baby boomers approaching retirement, the following information may assist in making the correct decision for their retirement.
Option 1 - Retirement at full retirement age - You can retire sith full benefits at your full retirement age. Initially, this was 65 years old but now varies from 65 years to 67 years depending on you year of birth.

Option 2 - Early Retirement - You can retire with reduced benefits when you reach the age of 62.

Option 3 - You can work and receive Social Security benefits at the same time - If you are 62 or older you can begin receiving benefits while still working. While you are working, your earnings will reduce your benefit amount until you reach full retirement age. For the year 2009, your benefit will be reduced when your income reaches $14,160. After that income level is reached, your benefit will be reduced by $1 for every $2 you earn. When you reach full retirement age, your benefit is recalculated and increased to essentially reimburse you for the number of months that your benefit was reduced. When you reach full retirement age, you can continue to work with no limits on your earnings.

I hope this information can help in making the correct decision for each individual. From a pure financial perspective, it would appear tha Option 3 woul be the best decision for most people.

More detailed information is available on the Social Security web site.

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Comment by Sandstone on February 16, 2009 at 8:25pm
Thanks, that helps a lot.
Comment by Joe Baird on February 16, 2009 at 3:24pm
The example given on the SS web site is this. You work and earn $22160 ($8000 over the $14160 limit) The benefit on the example would be a full retirement benefit of $1076 per month. Starting early at 62 the benefit would be cut to $800 per month (about a 25% reduction). For 5 months, $4000 would be withheld. Each year you would receive SS benefits of $5600 ($9600 - $4000). You would receive $22400 in benefits by the time you reach full retirement age. At that time the recalculation would increase the retirement benefit from $800/mon to $895/mon. I think the math is correct but you can go the web site and put your actual numbers in to calculate the benefits
Comment by Sandstone on February 16, 2009 at 11:26am
If you take option 3, what percentage is your benefit reduced at age 62? and could you please give an example of the dollar amounts if you make over the $14,160?
Thanks for the post..

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