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Bringing Home the Bacon While Officially Retired
Some 62 million Americans get Social Security retirement benefits and, for some, it is all the retirement income they have. A benefit check generally won't cover everything you need or want, especially if you are a mom supporting children. That's why many retirees continue to work as they get benefits. At some point, however, your benefits may be reduced if you earn more than a set limit. Whether and how much your retirement benefits are reduced depends on how old you are and how much you make.
How Much Money Can I Make Before It Affects My Social Security?
You've worked hard all your life and paid regularly into Social Security, the nation's insurance system. You can begin taking retirement benefits as early as 62 or as late as 70 years old. As you get older, you have to make hard choices about when to start taking benefits. If you start at 62, you will get benefits for more years but each benefit check will be less than if you start taking later.
What does this have to do with the amount of money you can earn before it affects your Social Security? Everything. Your age is the key factor in determining if and how your earnings affect your Social Security benefits.
How Much Can I Earn While on Social Security in 2018?
If you are receiving Social Security retirement benefits in 2018, the cut-off point for earnings is $*17,040* if you do not reach full retirement age that year. It is $45,360 in the year you reach full retirement age. You can earn that amount without having any detrimental affect on your benefit checks. You will continue to receive the same amount every month.
However, if you earn more than the limit in 2018, your benefits may be reduced. Whether they are reduced and by how much depends on whether you have reached "full retirement age."
What Is Full Retirement Age?
Full retirement age for Social Security purposes is set by Congress and sometimes changed by Congress. It was initially set at 65, but has been increased several times. That has resulted in different "full retirement" ages depending on the year in which people are born.
For those born in 1937 or earlier, full retirement age remains 65. For those born from 1938 to 1943, the full retirement age increases by two months for every year after 1938. For example, those born in 1939 have a full retirement age of 65 and two months. For those born in 1940, full retirement age is 65 and 4 months.
For people born from 1943 to 1954, the full retirement age is 66. For those born between 1955 and 1960, full retirement age increases by two months each year after 1955. For those born after 1960, the full retirement age is 67.
How Does My Age Affect How Much I Can Earn without Affecting SS?
Although the cutoff amount of earnings remains the same for all retirees ($17,040 in 2018), your age determines how earnings above this amount affect your benefits. If you are below full retirement age for the entire year, the SSA deducts $1 from your benefit payments for every $2 you earn above the limit.
In the year you reach full retirement age, the SSA deducts $1 in benefits for every $3 you earn above a different limit, $45,360. Earnings don't count for the entire month of your birthday, even if you reach full retirement age on the final day of the month. From the first day of the month in which you reach full retirement age, you can earn whatever you like and it won't affect your benefits.
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Teo Spengler has worked as a trial lawyer, a teacher and a writer at various times in her life, which is one of the reasons she likes to write about career paths. Spengler has published thousands of articles in the past decade including articles providing tips for starting a job or changing careers. Her work has appeared in numerous online publications including Legal Zoom, eHow Business, Livestrong, SF Gate, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, and Working Mother websites. She holds a J.D. from U.C. Berkeley, an M.A. in English and an M.F.A. in fiction.