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fsgmichigan.com 21 Even if you are in poor health, you may want to consider delaying benefits, especially if your spouse is in good health and you have the higher benefit. Taxes and Penalties, Oh my! If you are still working and under full retirement age you should be very careful claiming benefits. Not only will you receive a reduced benefit (because you are claiming early), you may have to pay taxes AND a penalty. If you are under full retirement age for the entire year, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2024, that limit is $22,320 of earned income. In the year you reach full retirement age, they deduct $1 in benefits for every $3 you earn above a different limit. In 2024, this limit on your earnings is $59,520 of earned income. Social Security only counts your earnings up to the month before you reach your full retirement age, not your earnings for the entire year. This penalty can be significant and can even wipe out your SS benefits altogether if your earned income is high enough. It is important to understand what earned income is. It is typically wages earned through a job or self-employment income earned through your effort. Passive income (e.g., pension and investment income) does not count against the annual limits. It is also important to understand that once you are Full Retirement Age for the full year, there is no limit to what you can earn. Even if you have a job that pays six figures, you will not be penalized as long as you are FRA. Other Benefits Below are few additional features/ benefits that are offered through the Social Security Retirement System. However, it is outside of the scope of this article to dive into details on these. If you think one of these may apply to you, I would encourage you to seek the advice of a financial advisor who is competent in Social Security Planning. Divorced Spouse Benefits - If you were married for ten years or more, have been divorced for at least two years, and have not remarried you may be eligible for Divorced Spouse Benefits. These benefits look and act a lot like spousal benefits. Widow/Widower Benefits - If your spouse has passed away and you have not remarried you may be eligible for Widow benefits. These can be very powerful benefits and should be carefully considered.