When to Collect Social Security: Why You Should Wait

However, withheld benefits are not lost forever. When the beneficiary reaches full retirement age, social security adjusts the monthly benefit to take into account the withheld benefits. The beneficiary receives the higher amount even after repayment of the withheld benefits, which can take 12 years.

Here’s how it works: Suppose a person is entitled to a benefit of $ 24,000 per year at full retirement age, but is entitled at 62 and receives a reduced benefit of $ 16,800. If the beneficiary earns $ 25,000, the government will withhold $ 3,020 for the year, which is half of the above-limit income. At full retirement age, the beneficiary will continue to receive the reduced benefit of $ 16,800, but will eventually get the withheld money back in the form of a higher benefit.

James Blair, the senior advisor at Premier Social Security Consulting in Cincinnati, said he advises professional clients to offset the social security income they receive by filing an early application with the permanent cut in benefits.

“If social security withholds two or three checks, they get paid for most of the year,” said Blair, a former social security administrator. “If they only get two or three checks, it’s usually better to wait to apply.”

Two rules could reduce benefits for people who are also entitled to a state pension for income not subject to social insurance.

One rule is the “Windfall Elimination Provision” (known as WEP), which applies to people who are employed subject to social security contributions, but who have also worked as uninsured government employees and receive a pension.

When it comes time to get benefits, many people are unprepared for these cuts, Blair said. Possible cuts related to WEP are not reflected in the employee’s social security statement, which includes the history of annual earnings and estimates of future benefits only for jobs subject to social security.

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