How Much Can You Make & Draw Social Security Retirement Benefits?
Social Security is a U.S. government old-age pension program that will provide you a monthly retirement benefit for as long as you live. The retirement program is intended to help working people be financially secure after they retire. Social Security's retirement benefit rules allow you to earn wages after retirement but may reduce your retirement benefit if your annual earned income exceeds certain levels.
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Earnings Limits
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If you were born Jan. 2, 1943 through Jan. 1, 1955, says the Social Security Administration website, your full retirement age is 66, although you can claim a reduced retirement benefit as early as age 62. For 2010, if you were under age 66 for the entire year, you could earn up to $14,160 with no reduction of benefits. If you turned 66 during the year, you could earn up to $37,680 without affecting your retirement benefit. If you were 66 or older for all of the year, you could earn as much as you like without any reduction in your Social Security retirement benefit.
Benefits Reductions
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If you are younger than your full retirement age, your monthly benefit will be reduced by $1 for each $2 you earn above the annual income limit. In the year you reach your full retirement age, your benefit will be reduced by $1 for each $3 you earn above the annual limit. If you exceed the annual earnings limit in any one year, Social Security says it will withhold your monthly benefit checks in the following year until the penalty is paid. But you don't actually lose that money. The penalty will be repaid to you over 180 months via an increase in your monthly benefit, starting in the first full year you were age 66 or older.
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Want Income Counts?
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Social Security says it only counts wages or self-employment net income toward your annual income limit. Social Security doesn't count income from sources such as unemployment compensation, other government benefits, pensions, interest, annuities, investment dividends or capital gains. Wages from an employer are counted when they are earned, while income from self-employment counts when it is paid to you.
First-Year Rule
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People who retire in mid-year may already have earned more than the income limits. So there's a special Social Security income rule for the first year of retirement. If you retired in 2010, had already earned more than $14,160 at retirement, but were under age 66 for the entire year, you will still get a full benefit payment for each month that your monthly post-retirement earnings were below $1,180. The following year, only the annual earnings limits apply.
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