After working for a few decades, you might have decided to claim early retirement benefits, and then forced to re-enter the rat race because of financial uncertainty. At a time of almost record-level unemployment, you consider yourself fortunate to have found work. The catch? The government might suspend your Social Security payouts.
Have you heard of the earnings test under your Social Security plan? This test, part of legislation surrounding the US pension system, says you can get benefits prior to normal retirement age, although you're not sure you'll get to keep the money if you land another job or work again before you've reached the normal age of retirement.
This earnings test has collectively set back a million of the program's beneficiaries by approximately $100 million per month in the previous year, according to the calculations of Social Security workers. This amount was up by almost 15%, compared to $660 million in 2008. Factors that have contributed to the increase include retirees whose finances forced them to return to work, although no one has calculated exactly how much of an impact it has on the overall jump in figures. However, these statistics make it necessary for anyone who wants to make early withdrawals think twice.
Today, the statistics are growing even more, as many unemployed seniors aged 62 and up have filed for early benefits to cover their expenses as they struggle to find work again and the paychecks start flying in. Since the economic recession, unemployment figures have also been on the rise, along with retirees who've filed for early Social Security benefits.
If you're thinking that there might be a chance you'll have to get back to work again after you've retired, talk to your retirement planner or investment advisor to know how much you might lose, and what you can do to cover your expenses, and buffer against the possible suspension of your Social Security payouts.