The Social Security Administration’s earnings test is crucial for early retirees considering claiming benefits before reaching full retirement age. For those born in 1960 or later, full benefits kick in at 67, but many opt for early retirement at 62. However, claiming early can lead to reduced monthly benefits, particularly if earnings exceed set limits.
This earnings test can significantly impact financial planning, especially for those who rely on Social Security for income. In 2026, beneficiaries under full retirement age will see $1 withheld for every $2 earned over $24,480. For those reaching full retirement age within the year, the threshold increases to $65,160, where $1 is withheld for every $3 earned. Understanding these limits is essential for retirees who plan to work, as exceeding them can diminish benefits and undermine the financial strategy behind early retirement.
For financial professionals, advising clients on the timing of Social Security claims is critical. Explore the full details of the earnings test and its implications for retirement planning in the original article.
Source: fool.com