A retirement paycheck is a practical way to think about how you will pay yourself during your retirement years.

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Special Situations to Consider Before Starting Social Security

There are a few situations in which making the decision to start Social Security retirement benefits may need some extra thought. In addition, if you already have started receiving Social Security benefits, particularly before your Full Retirement Age, you should review the following points.

  • “I’m currently working and won’t reach my Full Retirement Age for a year or more.” In 2018, if you earn more than $17,040 before the year you attain your Full Retirement Age, your Social Security retirement benefit will be reduced by $1 for every $2 over the $17,040 limit. For example, if your benefit should be $10,000 but you have an earned income of $19,040, your benefit amount will be reduced by $1,000 for 2018. Only earnings from self-employment and wages count as earned income for reduction purposes; income from investments, pensions and annuities doesn't count.
  • “I’m currently working but will reach my Full Retirement Age this year.” Between January 1 and your birthday in the year you reach Full Retirement Age, your Social Security retirement benefit will be reduced by $1 for every $3 you earn over $45,360 in 2018. Here is a simple example from the Social Security Administration (SSA): Suppose you weren’t at full retirement age at the beginning of the year but reach it in November 2018. If you earned $46,380 in the 10 months from January through October, the SSA would withhold $340 ($1 for every $3 above the $45,360 limit). After you pass your birthday in the year you reach your Full Retirement Age, however, there is no reduction in Social Security retirement benefits, regardless of how much you earn.
  • “I earn less than my spouse, who has started retirement benefits.” Even if the lower-earning spouse hasn’t reached his or her Full Retirement Age, it’s generally a good idea to start benefits at the same time as the higher-earning spouse. If the higher earner passes away first, the lower-earning spouse can then choose to receive whichever is higher.
  • “I’d like to work but I’m physically unable to or simply can’t find work.” If you are under Full Retirement Age but cannot work due to a disability, starting Social Security retirement benefits early may be a necessity to make ends meet. Or if you’d like to work but simply cannot find a suitable job, taking a reduced benefit can help meet your income needs.
  • “I’m a widow (widower).” As a surviving spouse, you can claim your own Social Security retirement benefit, or you can switch to your deceased spouse’s benefit if it is a higher amount. If you are under your Full Retirement Age, however, your benefits will be reduced permanently. You can wait until your Full Retirement Age to receive your full benefit, or even wait up until age 70 to earn an increased benefit amount.