I write a column like this one every January, but I don’t mind plagiarizing myself because it contains a very important message for people planning to retire...
If you are open to the possibility of increasing your benefit payout for 2023, you may want to consider filing for benefits in January.
Please note that if you want to delay filing for your Social Security benefits until 70 to get the “delayed retirement credit” of about 30% added to your monthly benefits, then you should forgo the procedure discussed in this column. Also, if you’re one of those people who absolutely insists on waiting until your FRA to file for benefits, then forget this column’s message.
The law essentially says if you are over 62 but under your full retirement age and are still working full time, you are not eligible for Social Security. Specifically, the rules require that the Social Security Administration deduct $1 from any retirement benefits you might be due for every $2 you earn over $21,240 in 2023.
But here is why Ed should check into applying for Social Security in January. Congress set up a more lenient earnings threshold for the year you reach your full retirement age. Specifically, it says you can earn up to $56,520 between January and the month you reach your full retirement age and still get Social Security benefits. Even if you earn more than $56,520, you lose only $1 from your benefits for every $3 you exceed that threshold.
If Ed’s Social Security benefit at full retirement age is $2,500 per month, let’s look at his options. Even if Ed were going to make more than the $56,520 income threshold between January and June, he only loses $1 in Social Security benefits for each $3 he exceeds that amount. So, he still might come out ahead by filing in January.
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