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How Working Impacts Social Security Retirement Payments


When you are retired, but thinking about working at another job it's important to consider how your earnings will impact your social security benefits.

Full Retirement Age

The good news is that once you reach full retirement age you can work as much as you would like without reducing your social security check. If you were born between January 2, 1943 through January 1, 1955, your full retirement age is 66. There are social security calculators you can use to determine your full retirement age and how much your earnings will be.

Earnings Limits

However, those who begin collecting Social Security at any age between 62 and their full retirement age will have their checks reduced if they earn more than the income limit. The current income limit is $14,640. Only earned income is subject to the limit and not interest, dividends, capital gains, pensions or government benefits. The Social Security Administration (SSA) will reduce your payment by $1 for every $2 you earn above the limit in 2012 if you are less than full retirement age.

It is important to note that any money withheld because of your earnings will not be permanently lost since the SSA will increase your benefit at full retirement age to account for that money.

A special rule is applied to those who reach full retirement age during 2012. The award for those individuals will be reduced by $1 for every $3 they earn above $38,880 for every month during 2012 until they reach full retirement age.

In some cases working can actually increase year social security award. If your income after you begin collecting social security ends up being one of the higher figures for your career, the SSA will recalculate your award and it may increase.

Read More: What Happens If You Earn More Than The Social Security Earnings Limit? | How to Land a Retirement Job

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