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Those Golden Years: Earned Income and Retirement Benefits


As we enter our sixties there hovers on the near horizon both the haven and the challenge of retirement. For all of us, current SSI/SSDI beneficiaries or not, there are also some quite novel regulations with regard to how Social Security treats us and our earned income.

The earliest age you can take Social Security Retirement is 62. If you are on SSI you will be obliged to take retirement at that time, if you are eligible. If you are on SSDI you’ll continue with that benefit until your full retirement age, at which point your SSDI will convert to Retirement. For those born in 1952, this is the year you’ll reach that landmark. If you’re 62 and have never had SSI or SSDI you have a choice to make: take a permanently reduced sum early or wait another 4 years for your full amount. If you can wait until you’re 70 then you’ll get even more than that.

If you are receiving retirement, have not yet reached the full retirement age and are working, then your benefit amount may be reduced. The most you can earn for the year in 2018 without there being any reduction in your benefit is $17,040. If you earn more than that Social Security will reduce the benefit amount by $1 for every $2 you earn over the $17,040 limit.

For example: If your monthly retirement benefit is $1000 a month ($12,000 per year) and you earn $19,040 in the year you can expect your benefit to be reduced to $917 a month. This is because you earned $2000 over the limit. Using SSA’s calculations the amount deducted from your benefit would be half of that amount ($1 deducted for every $2 earned) and thus your full annual benefit would be reduced by $1000, leaving you with an annual benefit of $11,000. That figure, spread over 12 months, is $917. Of course, this means that instead of living off $12,000 a year when not working you are making $30,040 thanks to your earned income.

Social Security is more generous once you reach the year in which you will qualify for full retirement. In the months before you actually reach full retirement Social Security won’t reduce your retirement amount at all unless you earn over $45,260 in those months. Even then, if you should earn more than that, they will only reduce your benefit amount by $1 for every $3 you earn over the limit. Therefore, for example, if you were born in June 1952 Social Security would only look at your earnings from January to May. For further clarification and examples please go to: https://www.ssa.gov/planners/retire/whileworking2.html

Once you reach full retirement age you can earn as much as you want and there will be no effect at all  on your benefits- the golden years indeed!