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per month that she would if she were to wait until she was 65. Joyce’s monthly benefits at age 65 would be about $1100 per month. But because she begins taking her benefits at age 62, her monthly check will be 20 percent less, or roughly $882 per month.

But not everyone wants to take their benefits early. Some don’t even want to start receiving their checks until after they are 65 years old. By not taking your benefits at full retirement age, you increase your benefits in two ways. First, each additional year that you work adds another year of earnings onto your Social Security record. The higher your lifetime earnings, the higher your benefits will be. Second, your benefits will be increased by a certain per- centage if you delay your retirement. These increases will be added in automatically starting from when you reach your full retirement age until you begin to take your benefits, or until you reach age 70. The percentages are based on your birth year, just as your retirement age is. (See Table 13.2.) So if you were born in 1952 and didn’t want to retire until you were 68 years old, you would have an added increase of 16 percent (8 percent per year increase or two thirds of 1 percent per month).

You also don’t have to wait to start claiming your social security benefits until you have actually retired from work. However, there are some limits on how much income you can receive and still have your benefits be 100-percent tax-free. It’s important to consult with your CPA to determine whether your benefits would be taxable if you still plan to work or earn some type of income while receiving your benefits. Your earnings in (or after) the month you reach your full retirement age won’t affect your benefits. But, your benefits will be reduced if your earnings exceed certain limits in the months preceding your full retirement birthday. If you are younger than full retirement age, one dollar in benefits will be deducted for every two dollars in earnings that are above the annual limit. In the year you reach full retirement age, your benefits will be reduced by one dollar for every three dollars in earnings that fall above the annual limit until the month that you reach full retirement age. After that, you can work without any reduction in benefits and no limit on your earnings. The annual limits are increased every year as the average wage rises.

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