Social Security Choices

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Claiming Benefits While You Are Working

While you're working, your benefit amount will be reduced only until you reach your full retirement age, which is 66 for those born between 1943 and 1954. If you are older than your full retirement age, there is no earnings-related reduction in your benefit.

As the table below shows, if you are under full retirement age when you start getting your Social Security payments, there is a $1 loss in benefits for each $2 earned above the annual limit when you are less than 65. Between ages 65 and 66 there is a $1 loss for each $3 earned above the higher annual limit.

Benefit Forfeiture Due to Working, 2014
Age Annual Income Limit Benefit Forfeiture for Income Above Limit
62 until Year of 66th Birthday Begins $15,480 $1 per $2 earned
Year of 66th Birthday $41,400 $1 per $3 earned
66 and above None N/A

The benefit reduction due to excessive earnings looks like a tax on earnings. That view is only partly correct. If some of your retirement benefits are withheld because of excessive earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were reduced. (For a nice illustration of how this works, see page 13 of "The Social Security Claiming Guide".) If you live into your 80s, you will generally recover everything that was initially withheld. If you live into your late-80s or 90s, you will more than recover what was withheld. So, while the benefit reduction may look like a tax on earnings, over the long run that view turns out to be incorrect for many people.

The SSA provides useful information about how work affects your benefits at their pages: "How Work Affects Your Benefits", "Exempt Amounts Under the Earnings Test", and "When you work and reach full retirement age". Also, the SSA provides a retirement earnings calculator to help you determine how working will affect your benefits.