Employment & Social Security Benefits
If you continue working after you begin receiving Social Security benefits, then your benefits might be reduced. Whether that happens depends on whether you have reached your "full retirement age," as defined by the government. The size of the benefit reduction depends on how much money you make from your employment.
Other People Are Reading
-
Full Retirement Age
-
All workers are eligible to begin drawing Social Security benefits at age 62. But that's not what the government considers your "full retirement age." That age ranges from 65 to 67, depending on the year you were born. If you start taking benefits before you reach full retirement age, your monthly Social Security check will be reduced. And if you continue working, and you make more than a certain amount, then your benefits will be reduced even further.
Earnings Limits
-
For those who are drawing benefits but have not yet reached their full retirement age, the government sets a maximum amount of income that you can earn in a year without reducing your Social Security benefits. This maximum increases with inflation. As of 2011, that amount was $14,160 a year. For every $2 you earn above that amount, the government withholds $1 from your Social Security benefits. There's a different maximum that applies in the year you actually reach full retirement age. During that year, you can make a maximum of $37,680 before the month you reach retirement age. For every $3 above that amount, the government withholds $1.
-
Reaching Your Age
-
Once you reach your full retirement age, earnings from work won't reduce your Social Security benefits, regardless of how much you make. In fact, if your benefits before that age were reduced because you were still working, Social Security will recalculate your benefits going forward to "make up" for the amount withheld.
First Year of Retirement
-
The yearly earnings limit creates a potential problem for people who retire early and begin drawing benefits. Say you make $48,000 a year, and you retire at the end of September at age 62. Your earnings for the year, about $36,000, put you well over the annual limit -- enough, in fact, to wipe out your benefits entirely. The government recognizes that this would be unfair, so it has created a special rule that applies only in the year you retire. Income earned before the month you retired is not counted; instead, only money you make after retirement is counted, and the annual limit is converted to a monthly limit. Dividing the annual limit, $14,160, by 12 months gives you $1,180 a month. In each month until the end of the year, your benefits will be reduced by $1 for each $2 you earn over $1,180. Once the next calendar year starts, only the annual limit applies.
-
