Don’t let receiving Social Security benefits force you to give up your job. While many Social Security users still get income from their jobs, their benefits are often cut based on their age and earnings. When you begin receiving retirement benefits, the SSA (Social Security Administration) views you as having “retired,” as GOBankingRates has previously documented. Your benefits may be lowered if you are under full retirement age as well as earn higher than the SSA’s annual earnings cap. 66 or 67 years old is the full retirement age, depending on whether you were born before or following 1960.
Employment Income Limit
Occasionally, the SSA changes the employment income thresholds for the earnings test. You will be entitled to make up to $22,320 in 2024 without having any benefits deducted. The earnings test threshold operates as follows: For every $2 you earn over the annual cap, the SSA subtracts $1 from the benefit payment that you have received if you are below full retirement age for the whole year. The SSA does not account for your whole earnings for the year; rather, it only does so up until the month before when you hit your FRA. The cap for recipients who do not meet FRA in 2023 is $21,240.
Benefits begin to be withheld at FRA; for each $3 you earn over a certain threshold, $1 is subtracted. This cap is set at $56,520 in 2023. That amount will be $59,520 in 2024. The Social Security Administration (SSA) solely considers your income from employment, or your overall profit if you work for yourself when determining how much to subtract from your benefits. Bonuses, commissions, and vacation money fall under this category. Pensions, annuities, interest from investments, veterans benefits, and other retirement benefits from the government or military are not taken into account by the SSA.
Benefits From Social Security
The Social Security Administration (SSA) has a specific regulation that pertains to wages for one year if your wages exceed the annual limit and you get retirement payments for only a portion of the year. This means that regardless of your annual income, you receive your full benefit from Social Security for each entire month that the Social Security Administration deems you retired. Here is an example provided by the SSA of how wages are subtracted: Assume you receive $800 in benefits each month, or $9,600 for the entire year, if you remain below full retirement age the entire year. You work and make $31,240 a year, which is $10,000 higher than the $21,240 cap. This is what to anticipate: A $5,000 reduction in your benefits from Social Security would result from earning $1 for every $2 over the maximum amount.
Let’s now assume that you attained full age for retirement in August 2023 & are eligible for benefits of $800 per month, or $9,600 per year. You put in a full year’s worth of effort and earn $63,000, of which $57,000 is earned in the period of seven months spanning January to July. You would go above the $56,520 cap by $480 as a result. When you attain the complete retirement age in August 2023, you will receive your entire benefit ($800 per month), regardless of your income. If you are awarded survivor benefits, your payment will be based on the (AET) annual earnings test and your full retirement age as determined by the Social Security Administration. The beneficiary is nonetheless subject to this restriction even if they are not eligible for retirement benefits.
