Some of these issues are: 1) how would an early retirement, for example at age 62 vs. age 65, affect your Social Security benefits; 2) how will those benefits be taxed; and 3) is it in your best interest to continue working to earn extra income when your benefits could be reduced based on how much you earn?

What's the Maximum?
As most people realize, Social Security provides only a base level of income. The maximum benefit for a person who retires in 2005 at full retirement age (age 65 and two months) is $1,939 per month. In comparison, the maximum benefit in 2004 was $1,825 per month. It is important to note that the benefit for a non-working spouse is only 50% of that amount.

Should You Delay Retirement?
If you delay retirement past your full retirement age, your monthly benefit will increase, based on the age at which you elect to take retirement benefits. But, upon attainment of age 70, the benefit increase no longer applies, even if you continue to delay payment.

Taking benefits at age 62 (considered early retirement) is appealing to many people. However, some continue working and earning additional money to supplement basic Social Security income. Here is where you need to be careful. When you do earn additional income, you may forfeit some of your benefits if you earn more than the maximum amount allowed. If you decide to take early retirement benefits from Social Security at age 62, your monthly benefit amount will be permanently decreased by 20% to 30%, based on your full retirement age. If you areunder the full retirement age, receive Social Security benefits, and earn additional income, your benefits would be reduced by $1 for each $2 you earn over $12,000 in 2005. The year in which you attain full retirement age, your benefits would be reduced by $1 for every $3 earned over a certain amount ($31,800 in 2005). Upon attainment of full retirement age, you may earn as much as you like and Social Security benefits are not reduced.

Full Retirement Age—It's Changing
For a long time, the retirement age has been 65. Due to longer life expectancies, that age will increase in gradual steps until it reaches age 67. This change began in the year 2000 and affects people born in 1938 and later. Age 62 remains the earliest you may begin to receive Social Security retirement benefits.

For Your Information
The Social Security Administration (SSA) provides a free service that allows you to check the accuracy of your Social Security records.

You can call Social Security at 800-772-1213, or visit their website at www.ssa.gov. You may request a Personal Earnings and Benefits Estimate Statement (Form SSA-7004). Once you complete the request online, or print the form and mail it in, they'll provide you with a yearly breakdown of salary credited to you since 1950. They'll also include an estimate of benefits to be received by you when you retire.