Workaholic? You can still work and claim Social Security

You can claim Social Security benefits and keep working after retirement, and many retirees are doing just that to supplement their monthly income. In fact, working and claiming social security can help you move up to a slightly higher monthly benefit later, if you are younger than your full retirement benefit age now.

Does working affect my benefit amount?

The Social Security Administration (SSA) allows persons who are receiving benefits to work if they meet certain requirements. Those who are getting disability benefits can work under special rules. If earnings exceed the set earnings amount for an individual, SSA may deduct a portion. If earnings exceed the entire benefit amount, they will reduce the benefit amount proportionately.

Retirees who have not yet reached their full retirement benefit age will have benefits reduced by $1 for every $2 they earn above $14,640 per year. Those who reach full retirement age within a year can still earn up to $38,880 and claim social security and receive their full benefit amount without any reductions. The SSA will take $1 for every $3 earned above that amount until the month when you reach your full retirement age. Once you celebrate that birthday, you can earn any amount without deductions.

Does my age affect my benefit amount?

Retirees who are at or above full retirement age are allowed to have unlimited earnings. Those who are younger than full retirement age (based on year of birth) can earn all they want, but if those earnings exceed a personal limit, SSA will either deduct part of their benefit amount or reduce it completely. Either way, retirees are better off to work while claiming Social Security, especially if they are under full retirement age. The SSA will recalculate the maximum benefit amount to include recent earnings and when the person does reach full retirement age, that monthly benefit amount may be increased due to those earnings.

Keeping track of this is not difficult; here is the basic story about working and claiming social security or disability benefits:

  1. Under full retirement age: individually based limits on penalty-free income; income will be included in calculation of benefits that will be received at full retirement age.
  2. Even if you get some reduction in current benefits, you will receive them later.
  3. At or above full retirement age: no limit on income and no reduction in benefits.
  4. Spouses and survivors caring for minor or disabled children have different work rules; consult with SSA for a final answer.
  5. There are exceptions to accommodate earnings you may have already had during the first year you claim Social Security benefits.

The limits for earnings are based upon the benefit amount. Limits will adjust each year; in 2012, the amount of earnings allowed for those under full retirement age is: $14,540. After you earn above that amount, deductions will be taken out until you reach full retirement age.

All Good News

Retirees get other benefits from working after retirement besides the needed income. Social interaction and just getting out of the house can be very beneficial and help keep a person physically and mentally active. Happier days combined with additional money will relieve stress and help pay the bills that never seem to go away! Complete information is available at the SSA website or you can call toll-free at 1-800-772-1213.

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