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Will working affect my Social Security benefit?

Posted by Jill Boynton  April 20, 2009 10:00 AM

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After reaching full retirement age is there a limit on how much you earn at a job to receive a benefit from social security?

Once you reach full retirement age (FRA) there is no reduction in benefits due to earnings. However if you collect benefits before you reach FRA, and you work, your benefits may be reduced. Here is how it works:

Social Security retirement benefits, for those who qualify, are available as early as age 62. However the Social Security Administration has designated a specific age at which one qualifies for their full retirement benefit - depending on the year you were born this could be anywhere from age 65 to age 67. This is called your Full Retirement Age (FRA) and collecting before then means receiving a reduced benefit, whether or not you continue to work. In addition to a reduced benefit, the SSA will take away $1 for every $2 of benefit for every dollar earned above a specific limit. For 2009 that limit is $14,160.

As an example, Stan is age 63 and is collecting $600 per month, or $7200 per year, in Social Security benefits. Stan also works and earns $15,000 per year. Since that is $840 over the limit, his yearly benefit will be reduced by $420.

For the year that you reach your FRA the earnings limit is increased to $37,680, and only $1 of every $3 earned above that limit is deducted. Finally the deductions only apply until the month before you reach your FRA.

Once you reach FRA your benefit is recalculated, leaving out any months for which you did not receive benefits because of the wage earnings deduction. For a full explanation and example of how this is done, click here.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
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