Retirement Information

When can you retire?

If you were born before 1938, your “full retirement age” is 65. Because of longer life expectancies, the full retirement age is increasing for people born after 1938. You can start your Social Security besnefits as early as age 62, but the amount you receive each month will be less than if you start at full retirement age.

Working after retirement

Once you reach full retirement age (65 for people born before 1938), there is no limit on the amount you can earn while collecting Social Security benefits. Before age 65, your payments may be reduced depending on the amount you earn.

Full Retirement

If you were born before 1938, you will be eligible for your full Social Security benefit at the age of 65. However, beginning this year (2003), the age at which full benefits are payable will increase in gradual steps from 65 to 67. The following table lists the steps:

Age to Receive Full Social Security Benefits:

Reduced Benefits As Early As Age 62

No matter what your “full” retirement age is, you may start receiving benefits as early as age 62. However, if you start your benefits early, they are reduced five-ninths of one percent for each month before your “full” retirement age. For example, if your full retirement age is 65 and four months and you sign up for Social Security when you’re 64, you will receive 91.1 percent of your full benefit. At age 62, you would get 80 percent. (Note: The reduction will be greater in future years as the full retirement age increases. For example, a person retiring at age 62 in the year 2003 will see a reduction of 23 percent. A person born in 1960 whose full retirement age will be 67 will see a 30 percent reduction when retiring at age 62.)

Working And Receiving Benefits At the Same Time

You can continue to work and receive full retirement benefits. Your earnings in and after the month you reach your full retirement age will not affect your Social Security benefits. However, your benefits will be reduced if your earnings exceed certain limits for the months before you reach your full retirement age, 65 for persons born before 1938 and gradually increasing to 67 for persons born in 1960 or later.

Here’s how it works:

• If you’re under full retirement age, $1 in benefits will be deducted for each $2 in earnings you have above the annual limit ($11,520) in 2003.
• In the year you reach your full retirement age, your benefits will be reduced $1 for every $3 you earn over a different limit ($30,720 in 2003) until the month you reach full retirement age. Then you can work without any reduction in the amount of your monthly benefit, no matter how much you earn.

People who work and collect disability or SSI benefits have different earnings requirements. They should report all their income to Social Security regardless of how much they earn.

We count only the earnings you make from a job or your net profit if you’re self-employed. This includes compensation such as bonuses, commissions and vacation pay. It doesn’t include pensions, annuities, investment income, interest, Social Security, veterans or other government benefits.

Your Benefits May Be Taxable

About 20 percent of people who get Social Security have to pay taxes on their benefits. This provision affects only people who have substantial income in addition to their Social Security.

At the end of each year, you will receive a Social Security Benefit Statement (Form SSA-1099) in the mail showing the amount of benefits you received. You can use this statement when you are completing your federal income tax return to find out if any of your benefits are subject to tax.

Although you’re not required to have federal taxes withheld, you many find it easier than paying quarterly estimated tax payments.

To have federal taxes withheld, you’ll need a form W-4V from the Internal Revenue Service (IRS). You can get this form by calling the IRS toll-free number, 1-800-829-3676, or by visiting SSA’s website at www.ssa.gov on the Internet. After completing and signing the form, return it to your local Social Security office by mail or in person.

To get the address of your local Social Security office, call 1-800-772-1213.

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Audit Decision Worksheet - Defined Benefit and Contribution Retirement Plans

2001 Tax Relief Act Changes to Retirement Plans