November 18, 2007 (Updated April 2012) — You guessed it: The most popular question asked at the Social Security Administration is “How much can I earn and still receive Social Security benefits”. Fortunately the SSA has the answers to this question and many others at www.ssa.gov.
This question is an important one because many people living in retirement communities either need to or want to work in retirement. This question pertains to what is called the earning test. If you are under Full Retirement Age (FRA) when you start getting your Social Security payments (for example, you start taking benefits at 62), $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2012 that limit is $14,640.
In the year you reach your full retirement age (66 for baby boomers) $1 in benefits will be deducted for each $3 you earn above a different limit, but only counting earnings before the month you reach FRA. For 2012, this limit is $38,880; for 2007. There is NO limit on your earnings starting with the month you reach full retirement age.
Some people seem to think that it’s not worth working under these circumstances, but most experts disagree. You will pay a fairly steep tax on your earnings, but only on those over the limit – and you are still making money anyway. Andrew Biggs, a deputy commission for Social Security, points out in this weekend’s Wall Street Journal another often overlooked benefit of working: the Agency recalculates your benefits at full retirement to make up for any benefits that might have been lost because of the earning test.
The Journal’s Guide to Social Security has many other useful facts to help you understand what is ahead. The Social Security website is one of the best government websites, it’s FAQ’s are very helpful.
Here is some helpful information about all aspects related to when to take your social security benefits.