There are three basic requirements for Social Security retirement benefits. First, a person must file a written application with a Social Security office. Second, the applicant must be fully insured, which means that the person has worked for at least 40 quarters, or ten full years. The third requirement is to be 62 years of age or older.
If You Claim Social Security Benefits Before or After Full Retirement Age
If you claim retirement benefits as soon as you turn 62 or any time before your “full retirement age” (66 for those retiring this year), your monthly payment will be permanently less than if you wait until full retirement age. This is due early retirement reductions: Your retirement benefit is reduced by a small percentage for each month that benefits are collected before full retirement age. For example, if you start collecting retirement benefits at age 62 rather than 66, you'll only receive 75% of your primary insurance amount (more on this below).
If you delay collecting retirement benefits past full retirement age, your benefit amount will be increased by a certain percentage each year you wait up to age 70. For example, if you delay retirement for four years, you will receive 132% of your primary insurance amount. Also, after you die, your spouse’s survivors benefits will be higher. After age 70, there is no longer any increase and no reason to delay claiming benefits.
Working While Receiving Social Security Retirement Benefits
You do not need to be retired to collect Social Security retirement benefits. Nor do you need to have low income.
But until you reach full retirement age, Social Security will subtract money from your retirement check if you exceed a certain amount of earned income for the year. For the year 2023, the limit is $21,240 ($1,770 per month). If you are collecting Social Security retirement benefits before full retirement age, your benefits are reduced by $1 for every $2 you earn over the limit. There's a special rule for earning income the year of you reach full retirement age: your benefits will be reduced by $1 for every $3 you earn over the limit, but the limit is $56,520 (in 2023) and only the income you earn before the month you reach your full retirement age is counted.
Once you reach full retirement age, there is no limit on the amount of money you may earn and still receive your full Social Security retirement benefit.
Retroactive Social Security Benefits
A person may request up to six months of retroactive benefits when he or she applies for retirement (or survivors) benefits. In other words, you can ask that Social Security mail you a check for the retirement benefits you are owed for the six months before you file.
Determining Your Retirement Benefit
Every wage earner who meets the eligibility requirements for benefits is entitled to monthly benefits based on their primary insurance amount (PIA). Your PIA is based on the wages you made in your 35 highest-earning years. To find out what your primary insurance amount will be, you can ask at the Social Security office, check your Social Security statement, or log into your Social Security account on www.ssa.gov. The average retirement benefit for someone who reaches full retirement age in 2023 is about $1,827 per month. The maximum retirement benefit for someone claiming benefits at full retirement age in 2023 is $3,627 per month.
Pension Income Other Than Social Security
While pension income from private employment in the U.S. doesn't affect your Social Security retirement benefits, foreign pension income might. Some people have earned a pension from work in another country as well as Social Security retirement benefits. Social Security generally boosts the retirement benefits of people who have years of non–Social Security earnings to make sure people have a minimal amount of Social Security benefits. But this artificial boost of benefits is eliminated for people who have benefits from a foreign retirement system.
Changing Your Mind About Taking Early Retirement
Some retirees who started collecting their benefits early because they needed the income realize they're losing potential benefits. For those who change their minds after applying for early retirement benefits—maybe they receive a windfall or they go back to work—Social Security allows a one-time "do-over."
Social Security allows you to "withdraw" your claim, but you must make a request to withdraw your claim within 12 months of when you started to collect retirement benefits (this deadline was imposed in 2010). You must also repay all of the past benefits you've received, which means very few people actually withdraw their retirement claim. Most people who elected early retirement don't have the entire lump sum available to pay back.
To reverse your initial decision, you file SSA Form 521, Request for Withdrawal of Application. But if you're considering withdrawing your claim and paying back your retirement benefits, consider consulting with a financial planner and tax adviser first.