Question about delaying Social Security benefits

[LewisC515428]

I am considering retiring at somewhere between 59.5 and 62.  I am considering the possibility of part time work.  My full retirement age (FRA) is apparently at 67 and my maximum benefit would be at age 70.  I have not seen any  information saying this is not possible, but I feel like I am missing something. Is there any restriction or disadvantage to this approach? 

[RobertH514774]

What is the question? Your post is a statement.

[Tonster521]

@LewisC515428, I am not sure if you are asking about when to start SS Benefits or when to retire. Many folks confuse retirement with separation from service. As you may already know, you do not need to retire to receive SS benefits. You just need to be age 62 (or earlier if disabled). If age 62 and still working whether full time or part time, there may be a reduction to your amount of SS Benefits if you exceed certain earnings as GaiL1 has pointed out. So, if you start SS Benefits at age 62 and work at the same time, you may end up with zero ($0.00) SS Benefits until age 67. However, if you are planning to delay SS Benefits until after attainment of age 67 or to age 70, you are not subject to the SS earnings reduction formula applicable to folks who start SS Benefits prior to age 67. Another issue to consider is the concept of maximum benefits. Are you concerned with just the SS monthly amount or your SS Benefits payable over your life expectancy? The SSA informs us that starting Early, at FRA, or Delayed are actuarial equivalents based on Average Life Expectancy (ages 83 to 84 based on gender neutral) and an approximate discount rate of 3%. Your Primary Insurance Amount (PIA) is developed at FRA (age 67) based on 35 years of Covered Earnings and the percentages corresponding to Bend Points which are adjusted from year to year. If you are concerned with SS Benefits payable over your life, you also need to address life expectancy. The SSA website provides an Actuarial Life Table (ALT) with mortality data for male and female. Remember, SS benefits are developed based on gender neutral which means females increase the Average Life Expectancy. The ALT informs that about 62% to 65% of males die before ages 83 to 84. So, the answer to obtaining maximum SS Benefits is more complicated than just delaying to age 70. 

You indicated retirement as early as age 59.5 which suggests to me that you may be thinking about making withdrawals from an IRA, 401 K, etc. as another source of income. After age 59.5, you are not subject to the 10% excise tax aka "the tax penalty". That may be a doable strategy for an earlier than age 62 retirement if you have a substantially large IRA, 401 K, etc. However, once you attain age 62, you need to determine if leaving your tax deferred accounts to grow and starting SS benefits is the more financially sound approach. I am including a link that may help point your decisions. https://www.financialplanningassociation.org/learning/publications/journal/FEB24-it-may-be-mistake-d... Hopefully, I copied and pasted the article correctly.

[GailL1]

@LewisC515428 

This should tell you all about it and any pitfalls you may encounter based on retiring BEFORE your Full Retirement Age and continuing to work.

SSA.gov - 2025 pamphlet - How Work Affects Your Benefits (pdf) 

You can retire at 62 (you have to be at least 62 and (1) month before your benefits can begin.)  At that age, your benefits will be reduced.  Around 25 - 30 %.  The older you are, the closer you are to your Full Retirement age, the less it is reduced.

 But if you are gonna continue to work - you will have to be mindful of the annual earnings caps because if you go over that amount of earned income, some of your benefits will be clawed back.  The earnings cap changes yearly.  2025 it is  $23,400 and for any amount you are over that in earned income, SSA will claw back $1.00 for ever $ 2.00 you go over that amount. 

Also remember that at 65, if you are already retired and are drawing a SS benefit, you will be automatically signed up for Medicare Part A and Part B.  Part A is normally premium free if you have worked long enough and contributed to the Trust Fund for Part A (HI Trust Fund).

Everybody pays a premium for Part B or it is paid for them by their state if they are very low income. For 2025, the Part B premium is $ 185.00 a month and it is scheduled to go higher every year.  It is deducted from your Social Security benefit check when you begin Medicare Part B at 65.  Higher income beneficiaries pay more in Medicare Part B & Part D.

Have you thought about how you will get your healthcare between the time you retire and 65 when Medicare starts?  That is sometimes an extra cost for beneficiaries that retire early.

Read the linked SSA pamphlet, it will answer many of your questions.