SS retirement penalties for working Archives

Collecting Social Security Retirement and Working Penalties

By Ed Crowe | General Articles | 0 comment | 31 July, 2017 | 0

Collecting Social Security Retirement and Working Penalties

This is an important post for everyone who is thinking about collecting their Social Security retirement. You need to know about collecting Social Security retirement and working penalties. If you receive early retirement benefits and continue to work, your Social Security payment may be reduced

In some cases, Social Security retirement benefits along with your savings and investments are not enough to live on comfortably. Therefore, many people need to keep working for a few years after they claim early retirement benefits from Social Security. Sometimes people decide to keep their job or take a new one in order to stay active and involved in the business world.

If you earn a high enough salary while you work, your lifetime earnings average can increase. This factor can increase your retirement benefit rate for the future. However, if you claim early retirement benefits and continue working, once you earn over a certain amount annually, you may receive reduced Social Security retirement benefits. This reduced rate can apply until you reach the full retirement age. The lower benefit amount will apply only during the years you continue to work. This does not have a lasting consequence on the amount of the benefits you receive for future payments.

Social Security subtracts money from your retirement payment if your annual earned income reaches a certain amount. They can do this until you reach the full retirement age which is age 66 for most people

In 2017, the annual earned income limit is $16,920 which comes out to about $1,410 per month. The amount of the annual earned income limit is adjusted up slightly every year. The benefits you receive from Social Security retirement are reduced by $1 for ever $2 you earn over the limit before you reach the full retirement age. There is no limit on the money you are able to earn once you reach the full retirement age. This means that no matter how much money you make you will still receive your full Social Security benefit.

Collecting Social Security Retirement and Working Penalties

If you are thinking about taking early retirement:

If you decide to retire and claim your Social security benefits at age 64, you will receive approximately 13% less than if you took benefits at your natural retirement age of 66. Also, if you continue to work and you earn (let’s say $3000 over the income limit) you lose one dollar for every two of the $3000 you made. This will add up to a penalty of $1,500. for the year. Both these actions will cause you to receive a double penalty. The penalty will cost you 13% every month until you reach full retirement age as well as the $1,500 you will lose in retirement benefits.

Please note; Social Security can withhold your monthly payments entirely until you have paid the over the income limit penalty. They do not reduce each monthly check by a small amount. However, if you are still working and lose your job, through no fault of your own, you can collect unemployment benefits. You can collect your Social Security benefits as well as unemployment.

If you would like more details about how working can effect your Social Security benefits click here

Special Rule as You Approach Full Retirement Age

There is a special exception for those that are making over the income limit in the year they turn their natural retirement age. If you will reach full retirement age in 2017, you may earn up to $3,740 per month without losing any of your benefits, up until the month you turn 66. But for every $3 you earn over that amount in any month, you will lose $1 in Social Security benefits. Beginning in the month you reach full retirement age, you become eligible to earn any amount without penalty.

Collecting Social Security Retirement and Working Penalties

Gaining Back the Reduction in Benefits From Working

The amounts of early retirement benefits you lose as a set off against your earnings are usually not gone forever. When you reach full retirement age, Social Security will recalculate upward the amount of your benefits to take into account the amounts you lost because of the earned income rule. The lost amount will be made up on an annual basis until all penalized income is recovered. Given it is only paid in small amounts, it could take up to 15 years to pay the money back. Keep in mind, none of this readjustment will change the permanent percentage reduction in your benefits that was calculated when you claimed early retirement benefits (the early retirement penalty).