While many federal workers have their eyes on an early retirement, some choose to retire later than the norm. There can be many reasons for postponing retirement, such as:
- You got a late start in your career, due to child rearing, changing your path in life, or some other reason, and you want to get in a full 30 years before you retire
- You don’t feel financially ready to retire, and need to keep working and saving money
- You’re enjoying excellent health, and don’t need to retire yet
- You enjoy your job and find great personal fulfillment in it, and worry that retirement might bore you
- … and many other personal reasons!
Whatever your reason for delaying retirement, you might wonder how continuing to work will affect your Social Security benefits.
If you claim your benefits before full retirement age (65 to 67, depending upon your birth year), your benefits could be taxed if your annual earnings exceed a certain threshold. However, once you reach your full retirement age, the earnings limit rule no longer applies. You will receive your full benefits without being penalized.
If you had already claimed your benefits before reaching full retirement age, and some of your benefits were withheld due to the earnings cap, you will actually be repaid that money at this point. Or, if you are just now claiming your Social Security benefits, you will simply receive your full scheduled benefits.
If you decide to keep working past full retirement age, but decide not to claim your Social Security benefits, your scheduled benefits will increase by about 8 percent for each year that you delay. Note that there is no extra benefit to delaying your claim beyond age 70. If you decide to go this route, you will retire with a larger monthly benefit from Social Security, and of course you will also your expected payments from your Thrift Savings Plan.
Retirement timing is a personal issue, and there is no perfect time for everyone to retire. But if you’re willing and able to keep working well into your 60s, you might be able to ensure a more generous monthly income when you do decide to retire.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
