Working While Receiving Social Security Retirement Benefits

If you make the decision to take your Social Security Retirement Benefits before reaching your full retirement age, there will be limits on the amount of money you can earn.

The government puts a cap on the amount you can earn by continuing to work after claiming your Social Security benefits. That cap will change from year to year. For 2020, the earnings cap was $18,240. Anyone below full retirement age who exceeds the cap will have $1 deducted for every $2 earned above the cap.

Example: Jack is 64 years old. He took his Social Security at age 62. Jack continues to work part-time as a CPA. In 2020, he earned $20,000 from his CPA business. $20,000 minus $18,240 = $1760. Jack earned $1,760 over the earnings cap. Jack will have $880 deducted from his Social Security benefits.

There are several sub-sections of this rule to consider. The first deals with claiming benefits mid-year. From the time benefits are claimed the claimant will not experience a deduction from social security, even if their year total exceeds the cap, so long as they earn less than $1,520 per month post-claim.

Example: Tom turned 62 in September of 2020 and took his Social Security benefits. By that time, he had already earned $60,000 for the year. So long as he earns less than $1,520 per month by continuing to work in the last 3 months of 2020, there will be no deduction from Social Security even though his earnings exceed the cap. However, in 2021, his earning will be subject to the annual earnings cap.

Once a Social Security recipient reaches full retirement age, the person is permitted unlimited earnings with no deduction from benefits.

Another sub-section of the rule to consider deals with claiming benefits prior to full retirement age, but the claim is made in the same year full retirement age is reached.

Example: Mary, who works full-time, will reach her full retirement age on September 1, 2021. However, she makes her claim for Social Security on February 1, 2021. Mary earns $10,000 per month. That means between February 1 and September 1, Mary will earn $70,000. SSA will deduct $1 for every $3 Mary earns above $48,600 until she reaches her full retirement age in September.

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