Many Social Security benefit recipients are concerned — and not entirely clear — about working while simultaneously receiving Social Security benefit payments, and the consequences of doing so. There are a number of issues to consider, but overall, the effects of working while receiving Social Security benefits can be polarizing. In some circumstances, earning while receiving benefits can reduce your total benefits amount, whereas in other circumstances, there are no negative consequences.
Confused? Let’s take a brief look at some of the basics.
Early Retirement vs. Full Retirement Age
Pursuant to current rules, qualified workers can begin receiving Social Security retirement benefits at age 62, about 4-5 years before reaching full retirement age. The decision to begin receiving benefits early is a difficult one, as recipients sacrifice up to 30% of their potential benefits income for the privilege of receiving benefits a few years earlier. Many recipients choose to receive benefits early due to desperate circumstances. Some simply choose to receive benefits early due to impatience!
If you choose to receive benefits early, then you could run into some issues when it comes to continuing to work. Before full retirement age is reached, there is an earned income limit (in 2017, the limit is $16,920). If you earn more than this amount, then the Social Security Administration will reduce your benefits payments accordingly — $1 per $2 earned in excess of the income limit.
For example, suppose that you are receiving benefits early (say, $800 per month), and you continue to work. In one year, you earn $26,920, a full $10,000 above the earned income limit. Your entire annual benefits payment would be withheld (as the $9,600 in annual benefits is less than the $10,000 deduction!).
Of course, you can avoid all this hassle by waiting until full retirement age to work while simultaneously receiving benefits. There is no earned income limit after full retirement age, so you can work as much as you like.
There are a few additional issues worth noting.
First, if your benefits are reduced due to earnings above the income limit, those benefits are not actually lost in the long-term — you will receive the lost benefits in the form of upwardly adjusted benefits at full retirement age. It will just take time to make up for the lost benefits.
Second, deducted benefits are not neatly applied to each monthly benefit payout. Instead, your benefits checks will likely be withheld until the deduction is complete. This can be a surprise for those who are expecting benefit money every month.
Though it may not seem necessary at first, it’s almost always worth consulting with an experienced social security lawyer as you proceed with applying for benefits, challenging a denial of benefits, requesting modification, and more. Your attorney will develop a solid strategy for maximizing your benefits. To speak with an experienced Tampa SSI lawyer today, call the Law Office of Mike Murburg, P.A. at (813) 264-5363.
We look forward to helping you with your Social Security claims.