Many Americans plan to have Social Security benefits waiting for them when they retire. But what happens if they keep working, even past the age of Social Security eligibility?
According to an analysis done this week by U.S. News and World Report, those who are receiving Social Security but also considering taking on a new job are advised to “run the numbers to see how your Social Security benefits might change.”
“ If you receive Social Security income while working,” the article says, “your Social Security benefits might be temporarily reduced, the Social Security earnings limit depends on your age, the amount you earn can impact the benefits you receive [and] you might be eligible for a higher Social Security benefit later.”
Those who have reached full retirement age—which for those born between 1943 and 1954 is sixty-six—can earn unlimited money while collecting Social Security.
“If you have reached full retirement age, you can earn as much as you wish without it affecting your Social Security benefits,” Stuart Chamberlin, president and founder of Chamberlin Financial, told U.S. News. “If you have not reached full retirement age and are collecting Social Security benefits, then you will be subject to income limits.”
Indeed, it’s another question altogether for those who opt to collect Social Security prior to full retirement age.
“If you opt to work while receiving Social Security before your full retirement age, you will only be able to receive a certain level of income before your Social Security benefit is temporarily reduced,” the article said. “The Social Security earnings limit is $1,580 per month or $18,960 per year in 2021 for someone age 65 or younger. If you earn more than this amount, you can expect to have $1 withheld from your Social Security benefit for every $2 earned above the limit.”
Those who are over that limit will therefore have some money withheld.
“Suppose you are 65 years old and will reach full retirement age in 2023. If you receive $2,500 in Social Security benefits every month and have a job that pays $2,000 a month, you are over the income limit of $1,580 by $420 each month,” the U.S. News article says. “During a year, you will receive $24,000 from the job, which is $5,040 more than the annual earnings threshold of $18,960. As a result, $1 out of every $2 above the threshold will be withheld. In this case, $210 will be withheld every month from your Social Security checks. You can expect to receive $2,290 each month from Social Security. When you turn your full retirement age, your payments will be recalculated to give you credit for the withheld portion of your benefit.” Those payments, though, are only withheld temporarily.
However, once you reach the full retirement age, the limit changes. The threshold, in fact, “increases to $4,210 per month or $50,520 a year in the year you turn your full retirement age.”
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.