Aged 62 working until 66 401k and Social security

[joeboo]

I need some advice. I was planning on retiring but have decided to continue working until 66 so I can get my full Social Security benefit. My company offers a 401k I am wondering if I would be allowed to max out my 401k and start collecting my social security at 62 and continue working and if this would be worth it. Does the 401k shelter some of my money. Or would social security use the pre-tax money earned against my Social security benefits. I currently earn about 65K annually. I was thinking if I maxed out the 401k $15500.00 plus the late start exemption of $5000.00 I could contribute $20,500. My Social Security if I take it now is $1700.00 per month. Any advice would be helpful. I'm not even sure if I could contribute to a 401k while collecting SS.
Thank you in advance.

Joe

[jIM_Ohio]

You can contribute to 401k while working
The issue is whether the income from work makes SS taxable.

SS now is $1700/month
what would SS be if you waited 4 years?

[LivingAlmostLarge]

How long are you going to live? I hear the age to break even is like 77 if you start at 62, or maybe 75.

[marvholly]

I am pretty much in the same boat. Will be 62 this year and ful soc due at 65. Reasons I am holding back on retiring at 62 are:

health incurance costs
market/investments have lost a TON

In your shoes be aware that if you are working + collecting soc you will lose some soc dependent on income. I would suggest an appointment at the local soc office to determine where/how you stand. I "hear" they are pretty good, have not tried myself.

[joeboo]

You can contribute to 401k while working
The issue is whether the income from work makes SS taxable.

SS now is $1700/month
what would SS be if you waited 4 years?

It would be roughly $2200.00 per month if I wait until I am 66.

[humandraydel]

It doesn't make sense to collect SS if you are working. Just wait 4 more years.

[Like2Plan]

I need some advice. I was planning on retiring but have decided to continue working until 66 so I can get my full Social Security benefit. My company offers a 401k I am wondering if I would be allowed to max out my 401k and start collecting my social security at 62 and continue working and if this would be worth it. Does the 401k shelter some of my money. Or would social security use the pre-tax money earned against my Social security benefits.

Take a look at your current W-2, Box 3 which is "Social Security Wages" to verify, but SS (and Medicare) taxes are taken out without regard to 401K contributions.
Flexible Spending Account (FSA's) contributions are not subject too SS and Medicare taxes. (This is about the only one I know of that is not subject to SS and Medicare taxes)

I currently earn about 65K annually. I was thinking if I maxed out the 401k $15500.00 plus the late start exemption of $5000.00 I could contribute $20,500. My Social Security if I take it now is $1700.00 per month. Any advice would be helpful. I'm not even sure if I could contribute to a 401k while collecting SS.
Thank you in advance.Joe

You can work while you receive Social Security retirement (or survivors) benefits.

However, if you are under full retirement age for the entire year, SS deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2008, that limit is $13,560.
link to retirement age chart.
With your current salary, I don't think that would leave much of a SS benefit.

Here are my calculations:

You make 65,000/yr - 13560 (annual limit) = 51440 / 2 (this is the $1.00 reduction for every 2 you make)= $25720
Your annual SS benefit would be $1700 (per month) X12 = $20,400.
Subtract the $25720 and you are left with no annual benefit.

Examples: When you work and reach full retirement age

Your best bet would be to check with the Social Security Office for clarification.