How much money can you make while receiving social security? This is a common question among individuals approaching retirement age or already receiving social security benefits. Understanding the rules and limitations surrounding income while on social security is crucial to ensure financial stability during your golden years.
According to the Social Security Administration (SSA), if you are receiving social security benefits and earn income, it can affect your monthly benefits. However, the SSA has specific rules in place to determine how much you can earn without facing penalties or reduced benefits.
Firstly, it’s essential to understand that the SSA has a limit on how much you can earn before your benefits are affected. For individuals who reach full retirement age (FRA), which is between 66 and 67, depending on your birth year, you can earn up to $18,960 per year without any reduction in your social security benefits. This amount is adjusted annually to account for inflation.
However, if you are under FRA, the SSA applies a more complex formula. For every $2 you earn above the annual limit of $17,640, your benefits are reduced by $1. This means that if you earn more than the limit, your benefits will be reduced accordingly. For example, if you earn $20,000 while under FRA, your benefits would be reduced by $2,000, or $1 for every $2 you earned over the limit.
Once you reach FRA, the SSA no longer applies the earnings limit, but it does have a different rule for earnings above a certain threshold. If you earn more than $50,280 in the year you reach FRA, your benefits will be reduced by $1 for every $3 you earn over the limit. However, this reduction only applies for the months you earn above the threshold, not the entire year.
It’s important to note that if you have a job that is not covered by social security, such as self-employment or certain government jobs, you are not subject to these earnings limits. Additionally, if you are receiving social security benefits and have not yet reached FRA, you may be eligible for a “retirement credit” for any months you do not work and do not earn any income.
Understanding how much money you can make while receiving social security is essential for planning your retirement income. By familiarizing yourself with the SSA’s rules and limitations, you can make informed decisions to ensure your financial well-being during your retirement years.
