Collecting Social Security at age 62

One of my friends is planning on retiring in April once he hits 62 and will collect social security. He is concerned about making too much income during this year before he retires, over the $23400 limit for 2025 and be penalized. He also mentions the penalty will follow him for a few years but gets mad at me for asking him more about it. I understand what the penalty is but does this whole scenario really apply to him? He is just basically working midyear until he turns 62 then wants to collect social security. Thanks in advance.

There are no income limitations the year you retire. Period. Last year was my time. This year, i’m going back to work, so I expect to see my retirement benefits vanish. After 45 years paying into the system, I call bull$hit on this, but I call that on a lot of things.

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Is Social Security Taxable? From Charles Schwab

If your friend needs help from a tax preparer or CPA, they really should get that help.

Personally, I’m going to take SocSec at 70, because my benefit will be much higher which will help in case my lifespan is very long. And if it isn’t… I won’t be around to care.

If I start at 62, I’d be getting $33,000 per year. But if I wait until 70, I’d get $55,848 per year. The break-even year is in your mid-80s. I should make it to that age.

If someone can get by until age 70, it’s worth doing, at least defer as long as possible.

I think that a better description is that social security benefits are delayed for earning above stated amounts during the years up to full retirement. Any dollars deducted from Social Security are returned after reaching full retirement age.
From the Social Security Website: If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2025, that limit is $23,400.
In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2025, this limit on your earnings is $62,160. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year
When you reach full retirement age: Beginning with the month you reach that age, your earnings no longer reduce your benefits, no matter how much you earn. We will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.

good post. I understand that. Nevertheless, I never expect to receive from SS all I put into it and what should be added investment income.

What I’d like to know are the mechanics. And I’m not going to wait on hold for 2 hours, or sit in a seat for two hours waiting for “service.”

Lets say hypothetically it’s 2025. In April I go back to consulting, and my corporation starts paying me again. I go zooming past the max income allowed. How do they know I made that money?

Your corporation files a 1099-NEC for tax year 2025?

No. My corp files an 1120. I work for my corp under a W2.