How does the provision of social Security affect people's incentive to save while working?

Question

how does the reduction in benefits associated with higher earnings affect people's incentive to work past age 65?
the social security system provides income for people over age 65. if a recipient of social security decides to work and earn some income, the amount he or she receives in social security benefits is typically reduced.

Answer 1

There is a benefit offset for people who retire early. At age 62, I will start getting Social Security benefits (in two months). I can work and earn up to $12,600.00 without a reduction in SS benefits.
On an actuarial basis, a person gets the same total amount of benefits if he retires early or after age 65. You just get lower payments, but for a longer period of time.
I retired early. So my SS benefits will be like a huge, tax free, pay raise for doing nothing.
If a person does experience a benefit reduction, he really doesn't lose benefits!!!!!!!!! If you take your SS benefits at age 62, and if you earn more than the minimum allowed, you are paying Social Security taxes while you work. You work longer, pay more in and benefits ultimately increase.

Answer 2

Your first statement is not quite accurate. Social Security has many programs but in general it is paid to people beginning at age 65 unless they choose to postpone it. It is also paid to children and adults with mental and physical disabilities. The other social security benefits programs are not based on the contributions that you and your employer made. If you take Social Security at a young age, and don't work, you do not accumulate any credits toward your retirement at age 65,66 or 67. What reduction in benefits are you talking about? You can get partial benefits if you take SS at age 62. Conversely if you wait until you are 70 and work the benefit will be higher than at age 65, 66 or 67. In this economy, not only are baby boomers retiring but people a few years younger who lost jobs are also retiring at age 62 for partial benefits. But there are so many millions of young people getting paid social security under different programs, that is what is a drain on the system. Only seniors who have worked and contributed to Social Security really deserve it.

Answer 3

I would say not a great deal...your question isnt well worded but those on higher earnings have generally managed to save for a pension privately and so have no need to work beyond 65. Those in very nice jobs even get to retire early on the same wages. If there was no reduction in pension in line with current earnings then those who could would probably work, if they could get it. It is a question of degree, if the reduction means you can earn significantly more combined than on a pension alone, then people will be more inclined to work. I hope this is what you mean.

Answer 4

Every wage earner who contributed to the social security system for 40 quarters [usually 10 years] is entitled to some sort of benefits on a monthly basis after retirement.

The earner can decide to get benefits as early as age 62, though full benefits aren't paid unless the earner waits for normal retirement age - usually 65 or 66.

If you take retirement before your normal retirement age, your monthly benefit can be reduced if you keep working and make over a certain amount - it varies with age.

If you wait until normal retirement age for your group, the monthly benefits are NOT reduced no matter how much you make.

Even if you are still working, when you reach normal retirement age for your group, the monthly benefits are no longer reduced due to income.

Bill Gates will be eligible to receive social security benefits if he wait until normal retirement age for his group - probably age 66 for him.

Answer 5

Nobody can live on Social Security alone, so only a fool would consider Social Secutity a disincentive from saving or working. Why do you think you see all those "greeters" at Wal-Mart?