Earned Income Limits for Social Security Benefits
The Social Security Administration (SSA) can send you monthly benefits in retirement as early as age 62. But until you reach your full retirement age, it may reduce your benefits if you continue earning income through work. The SSA will only lower benefits based on the money you earn above its annual income limit.
Social Security retirement benefits provide Americans with supplemental income at a certain age. This income allows many people to reduce their hours or stop working altogether. With more freedom comes the ability to focus on other pursuits, including time with family members, hobbies, or travel.
Some workers take early retirement by collecting Social Security benefits before reaching full retirement age. Early retirement reduces benefits by a percentage per month before full retirement age. Full retirement age depends on the year of birth. Full retirement age is 67 for people reaching age 62 this year.
Social Security retirement benefits also include an entitlement to Medicare at age 65 or older. Other entitlements may include spousal benefits and benefits to other qualifying beneficiaries such as children and ex-spouses. Also, the adult child of a retiree may be eligible for Social Security disability benefits if the disability began before age 22.
Many retirees decide to return to the workforce, even to work full-time, for one reason or another. This article discusses how returning to work can affect a retiree’s monthly benefits. You may also want to speak with a Social Security and retirement attorney about how to manage your savings and benefits to ensure a comfortable future.
Full Retirement Age
The amount you may earn without reducing benefits depends on full retirement age. You may collect full benefits, regardless of how much you work, beginning the month you reach full retirement age.
Before reaching full retirement age, the following limitations apply:
- If you are an earner under full retirement age for the entire year, the Social Security Administration deducts $1 from benefits payments for every $2 earned above the annual limit.
- In the year you reach full retirement age, the Social Security Administration deducts $1 from benefits payments for every $3 earned in the months before you reach full retirement age above a different limit.
The limits are subject to change and tend to increase on an annual basis consistent with the national average wage index.
Keep in mind that different rules apply to retirees who receive Supplemental Security Income or Social Security Disability Insurance payments.
What Is Earned Income?
Earned income determines whether retirement income may affect Social Security benefits payments. Earned income includes:
- Wages, salaries, tips, and other taxable employee pay
- Net earnings from self-employment
Some forms of income are not included as earned income. Examples include:
- Pensions
- Annuities
- Investment income
- Interest and dividend earnings
- Government or military retirement benefits
The Good News
Fortunately, it isn’t all bad news. Retired workers will continue to pay Social Security taxes. These extra earnings may increase your monthly benefit amount.
Also, the benefits reduced while you continue to work are not lost. Generally, once you reach the full retirement age, the Social Security Administration increases your monthly benefits to account for when the benefits were withheld.
The Social Security Administration offers an online Retirement Earnings Test Calculator. This calculator helps determine whether your earnings might trigger Social Security income limits and reduce future benefits. It also calculates your estimated monthly benefit. You may also register for a my Social Security account for your personal earnings record.
Learn More About Social Security, Retirement, and Survivors Benefits
A sound retirement plan is an important part of your future. It is wise to consult various resources to understand Social Security basics and weigh your retirement options. You may contact your local Social Security office or the federal government’s official website at SSA.gov. You may also contact a Social Security lawyer for a professional opinion.
Can I Solve This on My Own or Do I Need an Attorney?
- The initial Social Security process doesn’t require an attorney
- An attorney primarily handles claims that are denied
- It can be helpful to have an attorney during Social Security benefit disputes or appeals
A Social Security lawyer can help protect your rights to your benefits.
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Don’t Forget About Estate Planning
Now is a great time to consider creating or revising your estate plan. Protect your assets through a will, decide who can make financial decisions for you through a power of attorney, and ensure you make important health care decisions through a health care directive. You can create these critical documents online using DIY estate planning forms.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.