The Decision to Receive Social Security Benefits Early

It's true that your social security benefits are reduced if your earned income exceeds a threshold. For example, say your full retirement age is 66, you start benefits at 62, and you have earned income of $30,000 per year. You are $16,440 over the annual limit, so you will receive $8,220 less in benefits (50% of the difference). This reduction will continue until the start of the year when you turn age 66. Some commentators say that it is wasteful to start benefits early and then continue to work and lose benefits for several years. However, this is not so. Any benefit reductions are only deferred, and Social Security will credit those amounts to your benefits record when you reach full retirement age. There are good reasons not to start benefits before full retirement age, but this one isn't high on the list.