I finished my taxes and my accountant Harvey Cohen asked me to calculate what will happen with early retirement. Make sure you look up your full retirement age. Things also change over the years. Check out the Social Security Website it has a lot of information. The results are interesting. Comments?Early Retirement Worksheet Apply 3 months in advance:

Local Office: 140 Union Street Lynn MA,

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I am now approaching 62. Do I take social security at a reduced rate or wait until full retirement age for me at 66, or do I wait further until 70? The other question is how much can I earn during early retirement? I changed my numbers for privacy.

 According to example Social Security Statement:

62 $1200/month, $14400/year

66 $1600/month, $19200/year

70 $2000/month, $24000/year

This is quite accurate because my expected earning rate is per year is $xxxx and I am less than 2 years away according to the SS statement.

If I retire at 66, I catch up (62 – 66 earnings) in 12 years (age 78)

If I retire at 70, I catch up (66 – 70 earnings) in 12 years (age 82)

Spouse Social Security:

Here is the first gotcha. If your spouse earns less than 50% of your benefit she is increased to 50%.

Spouse earns  $500

62 1200, ½ = 600, delta +100

66 1600, ½  = 800, delta +300

70 2000, ½ = 1000, delta +500

Assuming we both live that long catch up goes to 8 and 9.5 years for 66 and 70.

 

Earnings :

The first year I retire in 2009 I would calculate the month of December; separately  $1,180 as the monthly limit.

The Next 3 full years (63, 64, 65) the calculation is an annual limit $14,160.

Any amounts over these limits are deducted from the SS benefit at 50%. If I earn 100 over the limit 50 is deducted from the SS Check.

In the year I turn 66 (2013, full retirement age) my earnings limit goes to  $37,680 and 1/3 of the amount over limit is deducted from the SS check.

The amounts are estimated by me and corrected by social security.

My 2008 earnings:

20000 Job A

20,000 Total

20000 – 14160 = 5840

5840 * .5 = 2920 = 243 monthly reduction

1200 – 243 = 957 Projected Social Security Benefit Amount

Considerations:

1.     Social Security qualifications change.

2.     I need the money now more than more money later.

3.     Home equity loans get cancelled based on balance.

4.      Earnings increase substantially and I’m locked in at a lower rate? There is some adjustment.

5.      While I’m younger I’m able to do more things with the money, than later on when I don’t need the money as much. Health issues etc.

 

Documentation from Social Security:

Special rule for the first year you retire

Sometimes people who retire in mid-year already have earned more than the yearly earnings limit. That is why there is a special rule that applies to earnings for one year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, regardless of your yearly earnings.

In 2009, a person under full retirement age for the entire year is considered retired if monthly earnings are $1,180 or less. For example, John Smith retires at age 62 on October 30, 2009. He will make $45,000 through October.

He takes a part-time job beginning in November earning $500 per month. Although his earnings for the year substantially exceed the 2009 annual limit ($14,160), he will receive a Social Security payment for November and December. This is because his earnings in those months are $1,180 or less, the monthly limit for people younger than full retirement age. If Mr. Smith earns more than $1,180 in either of those months (November or December), he will not receive a benefit for that month. Beginning in 2010, only the yearly limits will apply to him.

Also, if you are self-employed, we consider how much work you do in your business to determine whether you are retired. One way is by looking at the amount of time that you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired; if you work less than 15 hours a month, you are retired. If you work between 15 and 45 hours a month, you will not be considered retired if it is in a job that requires a lot of skill or you are managing a sizable business.

 

 

 

 

 

 

 

 

Earnings Limits

Under federal law, people who are receiving Social Security benefits who have not reached full retirement age are entitled to receive all of their benefits as long as their earnings are under the limits indicated below. For people born in 1943, the full retirement age is 66. The full retirement age will increase gradually each year until it reaches age 67 for people born in 1960 or later.

 

  2008 2009

At full retirement age or older

No limit on earnings

No limit on earnings

Under full retirement age

$13,560 / For every $2 over the limit, $1 is withheld from benefits.

$14,160 / For every $2 over the limit, $1 is withheld from benefits.

In the year you reach full retirement age

$36,120 / For every $3 over the limit, $1 is withheld from benefits until the month you reach full retirement age.

$37,680 / For every $3 over the limit, $1 is withheld from benefits until the month you reach full retirement age.

• “Government Pension Offset.”

 

 

http://www.ssa.gov/planners/faqs.htm

Q. My wife and I both worked under Social Security. Her Social Security Statement says she can get $850 a month at full retirement age and mine says I would get $1450. Do we each get our own amount? Someone told me we could only get my amount, plus one-half of that amount for my wife.
A. Since your wife’s own benefit is more than one-half of your amount, you will each get your own benefit. If your wife’s own benefit were less than half of yours (that is, less than $725), she would receive her amount plus enough on your record to bring it up to the $725 amount.