Working While Receiving Social Security? Here's What You Need to Know
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- Опубликовано: 12 июл 2024
- Reaching the age of 62 marks a significant milestone for many individuals. After years of working hard and contributing to the Social Security system, it's only natural to start thinking about collecting your benefits and getting back what you've invested. But what happens if you continue working while collecting Social Security benefits? This topic can be confusing, and misinformation abounds. In this video, we'll clear up the confusion and provide you with everything you need to know about working and collecting Social Security benefits.
👉 Understanding the Earnings Limit
One of the first things you should be aware of is the earnings limit. In 2023, if you are under your full retirement age (typically between 66 and 67), the earnings limit is $21,240. This means that if you earn more than this limit while also collecting Social Security, the Social Security Administration will start to withhold some of your benefits.
For every $2 you earn above the earnings limit, Social Security will withhold $1 from your benefits. It's crucial to stay below this limit if you want to avoid having your benefits reduced.
👉 What Counts as Earnings?
Only your wages count towards this calculation, specifically the income you personally earn from working. Other sources of income like dividends, pensions, or rental income, do not count as earnings for this purpose. Even if your spouse is still working and earning a substantial income, their earnings do not affect your earnings limit.
👉 Earnings Limit at Full Retirement Age:
The earnings limit changes when you reach your full retirement age. In 2023, the earnings limit at full retirement age is $56,520. If you earn more than this limit, the same rule applies: for every $2 above the limit, Social Security will withhold $1 in benefits. It's important to keep track of these limits as they can impact your benefits.
👉 Earnings Before Collecting Social Security:
If you plan to retire and collect Social Security benefits at full retirement age, the earnings you had before your full retirement age birthday do not count towards the earnings limit. Only the income you earn after you start collecting benefits is considered. This means you can earn as much as you want before collecting without affecting your benefits.
👉 How Social Security Tracks Your Earnings
When you apply for Social Security benefits, you'll be asked what you expect to earn in that year. Based on your response, Social Security will calculate how much they need to withhold from your benefits. At the end of each year, they'll reconcile your reported earnings with what was actually withheld, and adjustments may be made.
👉 Options for Adjusting Benefits
If you start collecting Social Security but later decide to go back to work or if your plans change, you have a couple of options. If you're under full retirement age and it's been 12 months or less since you started collecting benefits, you can withdraw your benefits. You'll need to repay what you've collected, but it's as if you never started collecting at all.
If you're full retirement age or older, you can choose to suspend your benefits. This allows you to stop collecting without repaying anything, and your benefit will continue to grow by 8% per year plus any cost-of-living adjustments until you decide to collect again.
👉 Recalibrating Benefits
If your benefits were withheld due to the earnings limit, Social Security recalibrates your benefits when you reach full retirement age. They will adjust your benefit amount as if you had collected fewer months early. This means your benefits will be less reduced when you start collecting again.
Navigating the intricacies of working and collecting Social Security benefits can be complex, but with the right knowledge, you can make informed decisions that maximize your financial well-being in retirement. Understanding the earnings limit, what counts as earnings, and your options for adjusting benefits is essential. Social Security is designed to provide financial security in retirement, and with careful planning, you can make the most of this valuable resource.
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⏱Timestamps:⏱
0:00 Intro
0:51 Earnings limit
1:41 What counts as earnings?
3:26 Full-age retirement earnings limit
4:53 Earnings before Social Security
5:23 How do they calculate?
7:14 Options for adjusting
11:38 Recalibrating benefits
13:23 Summary
13:42 Outro
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I'm 62 in 5 months and looking at this really hard. This video was super helpful.
Great Job! You have a very clear and articulate approach to communication. It's appreciated!
I appreciate that!
Best explanation of the benefits
great info- quick comment though: at 2:36 your example w.r.t. earnings limit is $27,240 PER MONTH earnings (above and beyond $1500/month social security), I think that was meant to be an ANNUAL earnings example, not monthly?
Right. That was what I was going to post regarding this scenario.
I saw that too. OOPS!!
Great video, James. Thank you! :) I've been unsuccessful in finding an answer to the following... For the earnings test, is the gross dollar amount of wages used as earnings, or are earnings based on AGI? Or another figure, e.g., taxable SS wages? This makes a pretty big difference for me!
I believe it is the gross amount of wages not AGI.
Really excellent information 👍👍
Thank you!
Nice video. Thanks. Can one not take benefits and delay further? Will benefits go up?
I need a video on 1009 employment while collecting SS early before the year of full retirement age???? Can I really only work 45 hours per MONTH??? Why isn’t the income limit used instead when we live in a gig economy?
If F.R.A. is 66 and 6 months, does the earning limit cover the calendar year or only the time before 66 and 6? My wife still works p/t and will hit the limit next week but hit her F.R.A. 2 months ago.
I received an overpayment notice. I just got one of those letters yesterday. They said since I made so much in 2023, I need to repay all of the payments from may-december. My question is, The money I made in 2023 was PRIOR to me applying for and receiving my ssa benefit. I thought it would not count since I made that money before I even applied for ssa? Am I wrong? Even on my 1099k form, it shows my income from may -december at $0.
Is that earning limit a year or month?
Yes, well said. I was hoping you would explain how and why I'm paying federal tax on my Social Security as I am working after full retirement. In 2022 I paid $1500 in federal taxes (1/2 was not refunded from my W2 & I owe the additional).
You mentioned suspending your benefits and then each year you get 8% more, but you didn't mention that the 8% increase stops when you turn 70.
James how about county pensions are they considered earnings? If that’s the case would ss withhold a dollar for every dollar ss benefit? I’m only 63. Pls let me know. Thanks!
Do annual earnings include employer contributions to 401k?
at 2:43, isn't that supposed to be $27,240 for the entire year? or 2270 per month?
I would like to clarify what I thought you said. At full retirement age, what is the most you can earn without a reduction in benefits? I thought at 67 there was no limit.
After the month that you reach your full retirement age there is no limit. But the limit on your earnings for the months before full retirement age is $56,520 (for 2023). So if you turn 67 in September then you could earn as much as you want Oct-Dec of that year with no reduction. If you earn above $56,520 Jan - Sept of that year then your benefits would be reduced.
@@RootFP SSA Customer service don't seem to know these facts. They are still talking about monthly limits up to the month of FRA. Which one is correct? Annual or Monthly limit?
file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
Is there any point that I can make as much as I wish and still receive my full Social Security benefits. Currently I’m making $200,000 a year. And I am 62 years old.
I believe at 70 there is no limit on income while receiving SSI. Maybe Mr. Canole can verify this.
After the month that you reach your full retirement age there is no limit. But the limit on your earnings for the months before full retirement age is $56,520 (for 2023). So if your FRA is 67 and if you turn 67 in September then you could earn as much as you want Oct-Dec of that year with no reduction. If you earn above $56,520 for Jan - Sept of that year then your benefits would be reduced.