One of the best aspects of Social Security is that you have a say when applying for benefits. You are entitled to your entire monthly pension at full retirement age or FRA. Depending on your birth year, you’ll reach 66, 67, or somewhere in between.
You can, however, apply for Social Security outside of FRA. You can sign up as early as age 62, but filing before FRA will result in a lower reward.
On the other hand, if you wait until after FRA to file, your monthly benefit will increase by 8% for each 12-month period you wait. And the benefit lasts until you’re 70 years old (meaning, you can no longer grow your benefits past age 70, but any boost you lock in will be yours to enjoy permanently).
Meanwhile, working, as well as collecting Social Security payments, are both viable. Your earnings will have no bearing on your benefits once you attain FRA. However, if you work and receive benefits before reaching FRA, you will be subject to an annual earnings-test restriction.
However, a new proposal on the table would boost the earnings-test limit. If it succeeds, seniors on Social Security might have a lot more flexibility  and possibly avoid losing out on benefits they would prefer to receive.
Is it possible that the earnings-test limit may be raised?
Seniors on Social Security can earn up to $1,630 per month or $19,560 per year before their payments are affected this year. If your wages surpass the maximum for this year, Social Security will deduct $1 for every $2 earned.
On the other hand, Rep. Bill Posey recently filed the Senior Citizens Inflation Relief Act, which calls for an immediate rise in the earnings-test ceiling for the years 2022 and 2023. If passed, the existing earnings-test maximum of $1,630 per month would be increased to $2,046.67 per month or $24,560 per year. (It’s worth mentioning that the earnings-test ceiling is higher for seniors achieving FRA this year.)
The rationale for this adjustment would be to provide seniors with more income-generating possibilities at a time when inflation is on the rise. Even during more modest periods of inflation, the elderly regularly struggle to keep up with living expenditures. However, costs are currently skyrocketing for both workers and elders. Rep. Posey’s idea is to provide temporary relief, so seniors do not have to rely on expensive loans to make ends meet.
A Real Lifeline
Some seniors are astonished to hear that their Social Security payments are affected by their earnings if they file before achieving FRA. The good news is that under the earnings test, withheld payments aren’t lost; they’re just repaid once FRA kicks in. However, for elders who require money right now, this is insufficient.
Increasing the earnings-test limit could provide much-needed relief to many seniors today. As a result, seniors should hope that Posey’s concept catches on and becomes a reality.
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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.
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