Part of retirement planning for a farmer includes Social Security benefits. Relatedly, if you are nearing retirement age, you might be asking yourself when you should start drawing Social Security benefits. The answer is, “it depends.” But there are a few principles to keep in mind.
1. Waiting to take Social Security can pay off.
The first point to remember is that maximum Social Security benefits can be received if you don’t withdraw benefits until you reach full retirement age – presently between ages 66 and 67. Additional benefits can be achieved for each year of postponement until you reach age 70.
2. Your income can affect benefits on a sliding scale.
Another point is that some Social Security benefits are reduced once certain income thresholds are reached. For 2024, if you haven’t reached full retirement age and earn more than $22,320, benefits get reduced by $1 for every $2 above the limit.
During the year you reach full retirement age, the earnings limit is $59,520, with a $1 reduction for every $3 over the limit. Once you hit full retirement age, the limit on earning drops off.
3. What counts as earnings?
In-kind wages count toward the earnings limitation test, but employer-provided health insurance benefits don’t. Also, federal farm program payments are not earnings for years other than the first year you apply for Social Security benefits.
4. Calculate When to Start Drawing Benefits
So, when should you start drawing benefits? It depends on your particular situation and your retirement plan. The Social Security Administration has some useful online calculators that can help. To access these resources, visit https://www.ssa.gov/
Read more of Roger McEowen’s thoughts on agricultural law and policy issues that matter to farmers and ranchers on his RFD Business Blog, Firm to Farm.
