Social Security Payback: A Must-Know for Early Retirees


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Today’s cardinal lesson addresses the issue of Social Security payback. If you claim Social Security before your full retirement age and then earn more than a set limit from a job, there’s a catch you might not be aware of. Tom and I delve deep into this topic to ensure you make informed decisions.

Why Is This Important?

Many are unaware of the implications of taking Social Security early while still earning a significant income. This video’s purpose is to prevent others from making costly mistakes. It’s crucial not to base your decision on hearsay or casual advice. Always consult professionals for guidance.

Understanding Social Security Payback

When you start your Social Security between age 62 and age 67 (full retirement age) and continue to work, two things happen:

By starting before full retirement age, your Social Security benefits reduce.

If you earn over the threshold, some of that reduced benefit might have to be returned.

Key Points:

If you earn more than $21,240 in 2023 before reaching full retirement age, you’ll pay back $1 for every $2 over that amount.

In the year you attain full retirement age, you can earn up to $56,520. Beyond this, the payback rate is $1 for every $3 earned.

Post full retirement age, there’s no cap on earnings without affecting your Social Security.

A Real-Life Scenario

Consider a nurse who retired after intense periods during the covid era. Upon getting lucrative job offers a year later, she returns to work, affecting her Social Security due to her earnings. It highlights the importance of being certain about your retirement decision, especially if you plan to claim Social Security early.

Implications of Payback

Should you go back to work without considering these rules, you’ll receive a letter from Social Security at the beginning of the next year stating your over-earnings and the amount you need to repay. If you’re unable to repay upfront, your future benefits will be reduced until the owed amount is covered.

Social Security Pay Back

In today’s cardinal lesson, we delve into the Social Security payback system. If you’ve taken Social Security before reaching the full retirement age and then earn an unexpected amount from a job, you might be in for a surprise. Tom and Hans discuss why understanding this system is crucial to avoid any future pitfalls.

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