Now that employees must fend for themselves when it comes to retirement savings, Social Security’s guaranteed income is becoming even more important.
A new report by Prudential, “Innovative Strategies to Help Maximize Social Security Benefits,” looks at how retirees can maximize their Social Security benefits and make them work for them throughout their retirement.
If you start worker, spousal, or survivor benefits prior to your Full Retirement Age, which varies by age, you will likely be subject to the earnings test. With the earnings test, if you start your benefits early, in every year leading up to the year you reach your Full Retirement Age, $1 in benefits will be withheld for every $2 you earn above the limit for that year ($14,640 in 2012).
During the year you reach your Full Retirement Age (age 66 for those born prior to 1955), your benefits are reduced $1 for every $3 you earn above a higher limit ($38,880 in 2012), until the month you reach your Full Retirement Age. At that point, the earnings test disappears.