Social Security Income Limit

Working and Social Security Payments at Age 66

What IS the Social Security Income Limit?

Have you considered working and collect Social Security, at the same time, to boost your spendable income? You could pay off debt, credit cards, or get new appliances or a new car, before you actually retire.

Have you considered the concept of living on your working wages, but instead of spending the Social Security income, sock it away for a rainy retirement day? You could put your Social Security payments into savings (direct deposit), for the future, not for today while you still have a working income. Just think, later you'd have fun money, help with financial issues, help with your bills, whatever.

Under Age 65

If you are under age 65 - the Social Security earnings limit is $14,160 if you are working and collecting your Social Security payments. If you earn over $14,160, you lose $1 for every $2 you earn, after you hit the max.

2012 Update: You can earn $14,640 a year and not lose any benefits in 2012.

That sounds bad and you do lose half of the SS payment over the earnings limit BUT you still get full Social Security for the first $14,160 in wages earned, and then half of your Social Security for the rest of the year (assuming you work over their limit). Right?

It will really help you, long term, if you don't take it early, when you are still working. If you wait, you get the higher Social Security payment which will last you for the rest of your life. However, for some folks, paying off some of your debt may help greatly as you have less payments in retirement, when you have less income, and the the peace of mind itself may be well worth it. It's a personal decision.

Over Age 66
(IF you were Born 1/1/43 - 1/1/55)

Over age 66 - there is no Social Security earnings limit. It used to be age 70... but was reduced to your "full retirement age" so that folks CAN continue to work and draw Social Security also.

You can wait longer to get to your "full retirement age" and full benefit payment -- but you can also consider drawing a Social Security benefit at age 66 - whether retired or still working.

You can continue to work and live on your working wages -- and save the Social Security payments for later, when you aren't working and need some extra cash. Every year, they recalculate your benefit and increase it due to your earnings the previous year.

For example, at $800/month Social Security -- you'd have $9,600 in your savings account in a year (actually, you likely won't have quite that amount because of taxes, depending on your income, but still a nice amount to add to savings in just ONE year!)

Year you become Age 66

In the year you hit age 66, there is a Special Rule that works like this (this might be MORE than you need to know.. just telling you in case you care...)

If your earnings for the months BEFORE you turn 66, exceed $37,680 -- you will lose $1 for every $3 you earned during those months. The months after age 66, have no Social Security earnings limit.

UPDATE: You can earn $38,880 a year and not lose any benefits in 2012.

More on SS benefits here!