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Retired Military Finances 101: How Much Can I Make if I Claim Social Security Early? Thumbnail

Retired Military Finances 101: How Much Can I Make if I Claim Social Security Early?

Retirement Funding

You have the option of claiming Social Security benefits from age 62 through age 70 (actually, you can go past 70, but there is no benefit in doing so). If you claim Social Security benefits before your Full Retirement Age (FRA) and you work, you have limits on how much you can earn and without forfeiting some of those benefits. Let's take a look.

When is Full Retirement Age?

FRA depends on when you were born. If you were born in 1960 or later, your FRA is 67. If you were born before 1960, your FRA will be 66 and X months. As an example, if you were born in 1957, your FRA was 66 and 6 months.

If you retire at your FRA, you will receive your full Social Security Benefit. If you claim benefits before your FRA, you will receive a reduced amount. The amount of reduction will depend on how many years and months you claim benefits before your FRA.

But that is not all. If you claim Social Security benefits early and work, your benefits could be reduced even more.

How Much Can I Earn in Years Prior to the Year I reach FRA?

If you claim benefits early and are working prior to the year you reach FRA and earn more than $22,320 (2024; $23,400 in 2025), your benefits will be reduced. Specifically, you the Social Security Administration (SSA) will deduct $1 from your benefits for each $2 you earn over the limit.

It's important to note that for this calculation, your military pension and VA disability compensation are not considered earnings and are not included. It also doesn't include dividends, interest or other investment income.

How Much Can I Earn in the Year I Reach My FRA?

In the year you reach FRA, the earnings limit increases to $59,520 (2024; $62,160 in 2025) and only applies to earnings prior to the month you reach FRA. The reduction is $1 for every $3 over the limit.

How is the Reduction Calculated in the Year I Claim Social Security?

In the year you retire (income below $1,860/month), you can get a full benefit for the months you are retired regardless of how much you earned prior to retiring.

All is not Lost

If your benefits are reduced, you will get increased benefits when you reach your FRA. In essence, your benefits will be recalculated to account for the money you did not receive.

Military Finances are Different

Your military pension and VA disability compensation are a very important part of your financial plan. If you work with a financial advisor that doesn't routinely work with retired Senior Military Officers and NCOs, you might get advice that doesn't accurately account for them and only considers Social Security. That's why we think you should work with a financial planner or advisor that works with Active and Retired Senior Military Officers and NCOs each and every day. If you'd like to find out how we work with people like you, use the button below to schedule a free initial consultation.

If you found this article useful, you might like the following blog posts:

Military Finances 201: Take Social Security Early and Invest It?


Another "Round" of Social Security for All My Friends!


Retired Military Finances 101: Social Security and Your Spouse



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