How Work Affects Your Benefits
From the Social Security Administration
SSA Publication No. 05-10069, January 2007, ICN 467005
Contents
You can get Social Security retirement or survivors benefits and work at the same time. Under the law, your benefits could be reduced if you earn more than certain amounts. However, these earnings may lead to an increase in benefits later on. This leaflet explains what counts as "earnings" and how to report earnings to Social Security. It also explains a special rule that usually applies to the first year you begin getting Social Security benefits.
NOTE: A different set of rules applies to people receiving Social Security disability benefits or Supplemental Security Income (SSI) payments. These people should report all earnings to Social Security. Also, different rules apply to most work done outside the United States. Contact Social Security if you are working (or plan to work) outside the country.
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How much can you earn and still get benefits?
If you were born January 2, 1942, through January 1, 1943, your full retirement age for retirement insurance benefits is 65 years and 10 months. If you work and are full retirement age or older, you may keep all of your benefits, no matter how much you earn. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits. If you are younger than full retirement age during all of 2007, we must deduct $1 from your benefits for each $2 you earned above $12,960.
If you attain full retirement age during 2007, we must deduct $1 from your benefits for each $3 you earn above $34,440 until the month you attain full retirement age.
These examples show how the rules would affect you:
- Let us say that you begin receiving Social Security benefits at age 62 in January 2007 and your payment is $600 per month ($7,200 for the year). During the year, you work and earn $20,480 ($7,520 above the $12,960 limit). We would withhold $3,760 of your Social Security benefits ($1 for every $2 you earn over the limit), but you would still receive $3,440 in benefits.
- Or, let us say you were not yet full retirement age at the beginning of the year, but reach it in November 2007. You earned $36,000 in the 10 months from January through October. During this period, we would withhold $520 ($1 for every $3 you earn above the $34,440 limit). You would still receive $5,480 of your Social Security benefits for the first 10 months. And, starting in November (when you reach full retirement age), you would receive your full benefits, no matter how much you earn.
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Your earnings and your benefits how much will you get?
The following table gives you an idea of how much you will receive in Social Security benefits for the year 2007, based on your monthly benefits and estimated earnings.
For people younger than full retirement age during the whole year
|
If Your Monthly
Social Security Benefit Is
|
And You Earn
|
You Will Receive
Yearly Benefits Of
|
|
$700
|
$12,960 or less
|
$8,400
|
|
$700
|
$15,000
|
$7,380
|
|
$700
|
$20,000
|
$4,880
|
|
$900
|
$12,960 or less
|
$10,800
|
|
$900
|
$15,000
|
$9,780
|
|
$900
|
$20,000
|
$7,280
|
|
$1,100
|
$12,960 or less
|
$13,200
|
|
$1,100
|
$15,000
|
$12,180
|
|
$1,100
|
$20,000
|
$9,680
|
|
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What income counts... and when do we count it?
If you work for someone else, only your wages count toward Social Security's earnings limits. If you are self-employed, we count only your net earnings from self-employment. We do not count income such as other government benefits, investment earnings, interest, pensions, annuities and capital gains.
If you work for wages, income counts when it is earned, not when it is paid. If you have income that you earned in one year, but the payment was made in the following year, it should not be counted as earnings for the year you receive it. Some examples are accumulated sick or vacation pay and bonuses.
If you are self-employed, income counts when you receive it — not when you earn it — unless it is paid in a year after you become entitled to Social Security and earned before you became entitled.
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Special rules for the first year you retire
Sometimes people who retire in mid-year already have earned more than the yearly earnings limit. That is why there is a special rule that applies to earnings for one year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, regardless of your yearly earnings.
In 2007, a person under full retirement age for the entire year is considered retired if monthly earnings are $1,080 or less. For example, John Smith retires at age 62 on October 30, 2007. He will make $45,000 through October.
He takes a part-time job beginning in November earning $500 per month. Although his earnings for the year substantially exceed the 2007 annual limit ($12,960), he will receive a Social Security payment for November and December. This is because his earnings in those months are $1,080 or less, the monthly limit for people younger than full retirement age. If Mr. Smith earns more than $1,080 in either of those months (November or December), he will not receive a benefit for that month.
Beginning in 2008, only the yearly limits will apply to him.
Also, if you are self-employed, we consider how much work you do in your business to determine whether you are retired. One way is by looking at the amount of time that you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired; if you work less than 15 hours a month, you are retired. If you work between 15 and 45 hours a month, you will not be considered retired if it is in a job that requires a lot of skill or you are managing a sizable business.
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Should you report changes in your earnings?
We adjust the amount of your Social Security benefits in 2007 based on what you told us you would earn this year. If you think your earnings for 2007 will be different than what you originally told us, let us know right away.
If other family members get benefits based on your work, your earnings after you start getting retirement benefits could reduce their benefits, too. However, if your spouse and children get benefits as family members, their earnings affect only their own benefits.
If you need help in figuring your earnings, contact us. When you call, have your Social Security number handy.
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How can your earnings after retirement increase benefits?
If you are younger than full retirement age and some of your retirement benefits are withheld because your earnings are more than $12,960, there is some good news. When you reach full retirement age, your benefits will be increased to take into account those months in which benefits were withheld.
Also, each year we review the records for all Social Security recipients who work. If your latest year of earnings turns out to be one of your highest years, we refigure your benefit and pay you any increase due. This is an automatic process and is usually completed by October of the following year. For example, by October 2007, you should get an increase for your 2006 earnings if those earnings raised your benefit. The increase would be retroactive to January 2007.
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Contacting Social Security
Our website is a valuable resource for information about all of Social Security's programs. There are a number of things you can do online.
In addition to using our website, you can call us toll-free at 1-800-772-1213. We can answer specific questions from 7 a.m. to 7 p.m., Monday through Friday. We can provide information by automated phone service 24 hours a day. (You can use our automated response system to tell us a new address or request a replacement Medicare card.) If you are deaf or hard of hearing, you may call our TTY number, 1-800-325-0778.
We treat all calls confidentially. We also want to make sure you receive accurate and courteous service. That is why we have a second Social Security representative monitor some telephone calls.
