Pros & Cons of Early Social Security vs. Retirement at Full Eligibility Age
You Can Work and Still Receive Social Security Benefits at the Same TimeYou can receive Social Security and still work, and it could actually increase the amount of benefits you or your family receive in the future. Earnings from your work will reduce your benefit amount until your full retirement age. The benefit amount will be recalculated when you reach full retirement age, to give you credit for any months in which you did not receive some benefits because of your earnings. You can calculate the precise effects of variable timing of retirement through use of the official online Retirement Estimator at www.socialsecurity.gov/estimator.
While under full age, SS deducts $1 for every $2 earned above the annual limit that is adjusted each year. The limit for 2011 is $14,160. After you reach full retirement age, you will receive full benefits with no limit on the amount of earnings you receive.
If you retire before age 66, however, your benefits will be reduced:
25% at age 62;
20% at age 63;
13 1/2% at age 64;
6 2/3% at age 65.
With Early Social Security Retirement, Medicare is Not Payable until Normal Retirement age, but Your Benefit Amount Can Be increased if Disabled.You are not eligible for Medicare until your normal retirement date, so it is not payable on an early retirement at 62. If you feel you are disabled, you should file for SS disability, and If you really need money immediately and are at least 62, you should file for early SS retirement benefits at 62. Be aware, however, that taking early SS retirement locks you in to only 80% of your maximum benefit, for life, of what you would get if you waited to full retirement age. If, on the other hand, you are found to be disabled, Social Security will consider you disabled to your full retirement age, and will adjust your benefit rate upward, from the early retirement to the disability rate. When you reach normal retirement age, your benefit amount will increase to the higher rate.
Do not forget to sign up for Medicare three  months before reaching age 65, or your coverage could be delayed and you can be charged higher premiums. full details are available at www.medicare.gov.
Additional Planning Strategies Are Available...but CAUTION is recommended1. If your spouse retires, you can file for benefits as a spouse, continue working, and then change your benefit classification to be based on your benefits when you retire.
2. You can file for retirement benefits when you reach normal full age, but "suspend" the receipt of benefits to a later date, while your spouse can receive benefits at the time you file. Your eventual benefits amount will increase until you finally apply for actual receipt of benefits.
3. You can apply for benefits as soon as you are first eligible, but later pay back all the benefits received, at which time you may be eligible for a higher rate of monthly benefits. This can amount to an interest free loan, and your benefit payment may be significantly higher, but your health status and life expectancy will govern. Of course, careful calculations are necessary to determine if any of these strategies is practical from an accounting standpoint and consultation with your financial or tax consultant is recommended.