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Today’s question is about Social Security — specifically, about continuing to work after those checks start rolling in.
The question isn’t so much about whether you can work. Of course you can; it’s a free country. What’s really being asked is what happens to your benefits should you work after applying for Social Security.
Here’s the answer.
For more information on this topic, check out “The Danger of Working While Collecting Social Security” and “14 Ways to Maximize Your Social Security Checks.” You can also go to the search at the top of this page, put in the words “Social Security” and find plenty of information on just about everything relating to this topic. Finally, be sure to visit the Social Security page of our Solutions Center.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this question is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.
Our question today comes from John. John says:
“I understand that after my full retirement age, there’s no limit to the amount I can earn without my Social Security being reduced. Is that correct?”
Before I answer the question, let me bring those of you who aren’t familiar with this topic up to speed.
When it comes to Social Security, there are a few ages to understand. First, you’ve got your full retirement age, which is the age at which you’re eligible for your full benefit. This age differs depending on when you were born, but it ranges from 65 to 67, with most people these days falling between 66 and 67.
You can also take a reduced benefit at age 62.
Finally, you can get an increased benefit by waiting until age 70 to begin collecting your monthly benefit.
Now, let’s talk about working and Social Security.
I’m the perfect example for this question, because I’m 62. So I can get a reduced Social Security benefit now. Based on my date of birth (1955), my full retirement age is 66 and two months. What John is asking me to confirm is that, after I reach age 66 and two months, my Social Security won’t be reduced if I earn money on the side.
John is correct. My Social Security will not be reduced when I earn money on the side after I reach my full retirement age. However, should I choose to take my Social Security before that age, and I also continue to work, my Social Security payments will be reduced. The reduction is $1 for every $2 I earn over a certain threshold. That threshold changes, but for 2018 it’s $17,040.
Let’s say I take my Social Security now at 62, and earn $18,040 this year. That’s $1,000 over the threshold, so my Social Security’s going to be reduced by $500 — again, that’s $1 for every $2 I earned over $17,040.
The lesson here: We don’t want to take our Social Security early if we’re earning over $17,040, because we don’t want to see our Social Security reduced. If possible, we’re better off using the income we’re earning and waiting until our full retirement age. Then we can earn as much as we want and our Social Security won’t be reduced.
I hope that answers your question, John. I’ve given you the broad strokes, but you can also go to this page of SSA.gov for more.
Let’s close with our quote of the day. This comes from the American writer Rachel Caine.
“You’d be surprised what people will do for money that they wouldn’t do for love.”
Kind of a depressing thought, but a thought nonetheless. Meet me here next time and make it a profitable day!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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