Social Security Matters

Dear Rusty:  I recently retired after more than 40 years in the construction industry. I’m 60 years young and my wife and I recently moved south to enjoy retirement in a new and milder environment. At this point, we do not plan on receiving my SS benefit until I reach my full retirement age of 66 and 8 months. In my 2018 statement, the Estimated Benefits Section, it states, “You have enough credits to qualify for benefits at your current earning rate. (If you continue working until your full retirement age of 66 years and 8 months your payment will be.).” Then it shows an amount for my full retirement age, age 70 and age 62. My question is, if I don’t work from now to my full retirement age will that significantly reduce my SS benefit rate that is quoted on my statement?  Signed: Retired early

Dear Retired:  Congratulations on your retirement! The estimated benefits shown on the statement you received from Social Security are just that - estimates. But they make a critical assumption, which will, indeed, make a difference in the actual amount of your benefit when you finally claim it.  

Those estimates assume that you will continue working at your current income level until you reach your full retirement age (FRA). But since you retired from work at age 60 your actual benefit (assuming you continue without working) will be less than the current estimates you have from Social Security. Whether the reduction will “significantly reduce” your benefit depends on your actual earnings in the 35 years used to compute your benefit when you claim.

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