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Can Working Too Much Cut Your Social Security Benefits?

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Making a smart choice about when to take Social Security is crucial, as your decision can affect your finances for the rest of your life. But some people don't realize that if they take early Social Security benefits before they stop working entirely, they can end up forfeiting some of what they receive from the government.

In the following video, host Alison Southwick interviews Dan Caplinger, The Motley Fool's director of investment planning, to learn more about how working can cut what you receive from Social Security. Dan notes that only people who have started taking early benefits but haven't reached their full retirement age need to worry, as anyone who has reached full retirement age can take their benefits without fear of forfeiting any of them no matter how much they work. But if you're younger than full-retirement age, you can lose $1 in Social Security benefits for every $2 you make above $15,120. For those who reach full-retirement age this year, higher limits apply, with the potential to lose $1 for every $3 you make above $40,080.

Dan continues by explaining that family members who receive benefits also have to pay attention to the limitations, as both their wages and the wages of the person on whose work history they're receiving benefits can come into play to cause reductions. Dan concludes that in general, it's smarter to wait until you've fully retired or reach full retirement age before starting to take Social Security in order to avoid the entire possibility of losing benefits.

Do you know everything you should about Social Security?
Complex rules like this make Social Security almost incomprehensible to many Americans. But we can shed some light on even the hardest-to-understand elements of Social Security to help you. In fact, that's why we came out with our brand-new free report, "Make Social Security Work Harder For You." Inside, our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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