18
April 2017
Dear Savvy Senior, I’ m considering retiring later this year and starting my Social Security benefits, but would also like to work part time. Will this affect my benefits, and if so, how much? Ready to Retire
Dear Ready,
You can collect Social Security retirement benefits and work at the same time, but depending on how old you are and how much you earn, some or all of your benefits could be temporarily withheld. Here’ s what you should know.
Working Rules
Social Security says that if you are under your full retirement age – which is 66 if you were
born between 1943 and 1954, or 66 and two months if you were born in 1955 – and are collecting benefits, then you can earn up to $ 16,920 in 2017, without jeopardizing any of your Social Security if you don’ t reach your full retirement age this year. But if you earn more than the $ 16,920 limit, you’ ll lose $ 1 in benefits for every $ 2 over that amount.
In the year you reach your full retirement age, a less stringent rule applies. If that happens in 2017, you can earn up to $ 44,880 from January to the month of your birthday with no penalty. But if you earn more than $ 44,880 during that time, you’ ll lose $ 1 in benefits for every $ 3 over that limit. And once your birthday passes, you can earn any amount by working without your
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How Working In Retirement Can Affect Your Social Security Benefits
benefits being reduced at all.
Wages, bonuses, commissions and vacation pay all count toward the income limits, but pensions, annuities, investment earnings, interest, capital gains, and government or military retirement benefits do not. To figure out how much your specific earnings will affect your benefits, see the Social Security Retirement Earnings Test Calculator at SSA. gov / OACT / COLA / RTeffect. html.
It’ s also important to know that if you do lose some or all of your Social Security benefits because of the earning limits, they aren’ t lost forever. When you reach full retirement age, your benefits will be recalculated to a higher amount to make up for what was withheld. For details
and examples of how this is calculated, see SSA. gov / planners / retire / whileworking2. html.
For more information on how working can affect your Social Security benefits, see SSA. gov / planners / retire / whileworking. html, or call Social Security at 410-965-2039 and ask to receive a free copy of publication number 05-10069,“ How Work Affects Your Benefits.”
Tax Factor
In addition to the Social Security rules, you need to factor in Uncle Sam, too. Because working increases your income, it might make your Social Security benefits taxable.
Here’ s how it works. If the sum of your adjusted gross income,
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