Should I Take Social Security Early And Put More Into My 401K Plan?

Dec 26 2016 - 9:45am

I'm 62 - working and plan to work for 10 more years - $40K annual income - can I push $25,000 into my 401k (to reduce income) and draw my SS at age 63 - I understand the benefit would be reduced but I think I should still come out $12k+ per year - what is your advise? Thanks!

Hi,

I'm not an expert on economics, so I'll defer to Larry's thoughts on this issue which can be found in the following columns: http://www.pbs.org/newshour/making-sense/collect-social-security-early-o... & https://401kspecialistmag.com/why-social-security-and-401k-coordination-....

Another problem with your plan is the Social Security earnings test (https://www.ssa.gov/planners/retire/whileworking2.html). If you file for benefits at age 63 and continue to work and earn $40,000 per year, Social Security will withhold at least a large portion of your benefits until the calendar year in which you reach full retirement age, which is 66 in your case. Social Security counts the full amount of your gross wages for earnings test purposes, regardless of whether or not you're contributing to a 401K plan.

You may want to consider running the maximization software available on this website before making any decisions about when to file for benefits.

Best, Jerry