Social Security is a federal retirement savings program that all wage-earners in the United States must contribute to. You can begin drawing reduced retirement benefits as early as age 62, and there is also a "full retirement age" at which you can draw a full benefit. If you wait past your full retirement age, your monthly benefit increases until age 70, when you reach the maximum. Social Security continues until your death with annual cost-of-living adjustments. At any time after you begin drawing Social Security, you can opt out of the system.
If you take early retirement, you can request that Social Security cease your benefits without any kind of penalty as long as you're within 12 months of the start date. Many people do this when they change their mind on early retirement and decide it's better to wait a few years to draw a higher monthly benefit. If you do request a stop on the benefits within 12 months, then you must repay Social Security the full amount that you've already received. The retirement benefit will increase the longer you wait to resume the payments until you reach age 70.
If you take early retirement and don't request the suspension and repayment method within 12 months, then your retirement benefit will be fixed. There would be no advantage to waiting six weeks or six years to resume the benefits because the amount will not change. If you are earning money during the early retirement years, remember that your Social Security benefit will be reduced further -- the agency subtracts $1 for every $2 in earned income from your monthly payment. This reduction ends when you hit full retirement age.
If you've reached full retirement age -- which is between 65 and 67, depending on the year of your birth -- you can request a voluntary suspension of benefits. Social Security will stop your benefits and won't require a repayment. The agency will begin to count additional earnings and late-retirement credits towards a higher benefit when, and if, you request a resumption of payments. By following this start-stop-start strategy, you can max out your monthly benefits when you reach the age of 70. The downside to doing this: you won't have any Social Security income between the time you stop and your 70th birthday.
It's easier to plan for retirement if you have some idea of the benefits you'll receive from Social Security. The agency will send a benefit statement on request, which you can send by calling the agency or visiting its website. The document will break out your earnings history throughout your life and estimate your monthly benefit should you start taking retirement at age 62, at your normal retirement age or at age 70. Social Security operates an online benefit calculator as well.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.