Despite the reduction in benefits, there are times when it makes sense for clients to collect Social Security before full retirement age. Clients considering this option should know that their work income will decrease the amount of benefits they get, at least temporarily.

If one is working and is not yet at full retirement age, for every two dollars they earn over $15,720 (the figure for 2015), one dollar in benefits would be withheld, says Steve Williams, vice president, national head of financial planning at U.S. BMO Private Bank in Chicago. For example, if one makes $25,720, they would be $10,000 over the limit and $5,000 of their Social Security benefits would be withheld.

"But what many people don't realize is that their benefits will be adjusted in the future, so that should not discourage them from working and taking Social Security," Williams says.

STRETCHING INCOME

Mary Voll Miller, a financial advisor at Per Stirling Capital Management in Austin, Texas, says it makes sense for some clients to collect early and still work: "I have a client who is a widow and earns about $30,000 per year. Her husband was the major breadwinner. Her own benefit will never be more than the survivor benefit, even if she delays until age 70."

Miller ran a scenario and determined that if the client took her own benefit at age 62, even if she continued to work, she would "at least be getting something to help stretch her income until she can take the survivor benefit at full retirement age."

If people wait until full retirement age to collect benefits and then go back to work, they will not get any reduction in benefits, says Barbara Schelhorn, senior director at Sullivan, Bruyette, Speros & Blayney, part of BMO Private Bank, in McLean, Va.

"When one goes back to work past normal retirement age and claims their Social Security benefit, their benefit will actually increase more than just the cost-of-living increase, because they are continuing to pay more money into Social Security," Schelhorn says.

'FREE MONEY'

Catherine Seeber, a principal at Wescott Financial Advisory Group in Philadelphia, recommends that clients wait until they reach 70 to claim benefits if there are other sources of income or assets from which to draw from prior to that age.

If they continue to work past 70, they should still claim Social Security to supplement their income. "After age 70, there is no longer any advantage in delaying your benefit," Seeber said. "If not taken, you would be throwing away free money."

Katie Kuehner-Hebert is a freelance writer in Running Springs, Calif. She has contributed to American Banker, Risk & Insurance and Human Resource Executive.

This story is part of a 30-day series on Social Security and retirement income strategies.