can i collect my social security without a major penalty

Asked October 3, 2016, 1:01 PM EDT

I am about ready to turn 63. I am currently making $43,000 annually. Can I go ahead and start collecting my social security benefits, knowing that it would be at a reduced rate due to my set rate of retirement at 66, but with no other penalties. I could use the extra money. Does what my wife make annually have any bearing on my social security benefits or penalties?

Orleans Parish Louisiana personal finance legal topics retirement planning

1 Response

You can claim Social Security anytime after age 62 but, as you note, there will be a permanent reduction in your monthly benefit if you claim benefits before your full retirement age (FRA). FRA is age 66 for people born between 1945 and 1954. At age 63, you will receive 80% of your FRA benefit. At ages 64 and 65, these percentages are 86.6% and 93.3%,respectively, of your FRA benefit. Your benefit is not directly affected by your wife's earnings. However, indirectly, it may be due to federal income taxes on benefits. Depending on your wife's income, up to 85% of your benefit may need to be included in your income for tax purposes. You will need to set aside a portion of your monthly check to pay quarterly estimated income taxes if you are affected by Social Security income tax rules.