If you retire early, doing some part-time work will put a dent in your Social Security benefits. From age 62 through age 64, one dollar in benefits will be withheld for every $2 in earnings above a certain limit. In 2003 that limit will be $11,520 per year ($960 a month), up from $11,280 a year ($940 a month) in 2002.
The rules change dramatically, though, in the year you reach full retirement age. Then, the limits increase and the penalty decreases.
In the year you reach full retirement age, one dollar in benefits will be withheld for every $3 in earnings above the limit. The limit was $30,000 a year ($2,500/month) in 2002, increasing to $30,720 a year ($2,560 a month) in 2003.
Once you reach full retirement age, no earnings penalties apply. Full retirement age is 65 for retirees born in 1937 and earlier but 65 and two months for those born in 1938, 65 and four months for those born in 1939, etc.
