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Working while receiving Social Security Benefits

Posted by Shanna Tingom, AAMS® on Aug 31, 2021 6:22:00 AM

Retirement is something most people look forward to in the United States. This is because it offers them the opportunity to travel, spend time with their families and essentially relax. All that is possible because most people are going to qualify for Social Security benefits. However, some individuals, especially those who used to run their own business, may find retirement to be a little too dull for their liking. As a result, many will often go looking for part-time work to either have something to do or supplement their monthly income. But how much does this affect your Social Security benefits? Read on to learn about this very important topic. 

How Your Social Security May Change 

As stated above, beginning to work full or even part-time can drastically affect your Social Security benefits. Although there are various factors that the government will take into consideration before making any changes, it is still good to know the potential changes that may benefit you. Below are a few of those potential changes: 

  • Your benefits will vary depending on your age
  • Your Social Security benefits may be reduced depending on your new income.
  • The types of benefits may be eliminated or altered to account for your new income.

Understanding Full Retirement Age

One of the most common terms you will hear when considering opting in for Social Security is "Full Retirement Age." This is because although you can certainly accept Social Security at 62, your benefits may be reduced depending on your birth year. What this means is that depending on the year you were born and the laws during that time, your "full retirement age" will matter greatly in terms of how much you get. For example, someone born in 1937 or earlier will reach full retirement age of 65 rather than today's 62. Why does this matter so much? It matters because if you are legally at full retirement age, you can work and earn as much as you want without being penalized by the government. 

Working Before Full Retirement Age 

If, unfortunately, your birth year law states that you are not considered to be at "full retirement age" just yet, you will have to be careful about how much you earn each month. According to the Social Security department, individuals who are not at full retirement age and are currently working full or part-time can only make $1,580 per month or $18,960 per year. If you go beyond that limit, your benefits will decrease by one dollar for every two dollars earned over the limit. That is why it is highly recommended to keep a detailed record of how much you are earning through regular wages and yearly bonuses, as they will also be considered part of your income. 

Social Security Earnings Limit for 2021

Earlier, we spoke about the fact that those who are at full retirement age can earn as much as they want without fearing a reduction in their benefits. However, things are going to be very different if you are reaching full retirement age within the year 2021. This is because now there will be an earnings limit imposed amongst many other changes. The new earnings limit for individuals who will be reaching full retirement age and receiving Social Security will be $4,210 per month or $50,520 a year. After every one dollar that is earned, three dollars will be reduced from your monthly Social Security check. 

As you can see from the information above, several factors must be taken into consideration when deciding to return to the workforce. Although each person's circumstance & experience will dictate how much or how little of their benefits are changed, much of the rules imposed by the Social Security department are universal.

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