Discussion:Social Security and earnings
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Discussion Forum Index --> Basic Tax Questions --> Social Security and earnings
Discussion Forum Index --> Tax Questions --> Social Security and earnings
| 26 July 2008 | |
| I've checked ssa.gov FAQ and couldn't find an answer to the question my client asked me. I also did a search in the little yellow box on the side.
My client started to collect social security at age 62. He works and is earning less than the allowable $13,560. Next year when he turns 66, his full retirement age, will his income still be limited because of the early social security, or will he be able to earn any amount? Thanking everyone in advance. | |
Death&Taxes (talk|edits) said: | 26 July 2008 |
| Quickfinder spells out that in the year the recipient reaches full retirement age, there is a modified earnings test for the months prior to the date s/he reaches that age, then earnings are not relevant. The wording is 'in the year the individual reaches full retirement age'
The SSA website contains tons of information, but can be difficult to negotiate, or to know what to ask and how to frame it. | |
| 26 July 2008 | |
| I also elected to receive social security at age 62. I will reach full retirement age 65 & 10 months in August 2008. I recently received a letter from the social security adminstration that states that in August 2008 the earnings limit no longer applies to me.
The letter also states if you decide to return to work, the additional earnings could increase your future benefits. The two page letter seems to encourage me to return to work. The answer to your question is. When your client reaches full retirement age he will be able to earn as much money as possible without reducing his social security benefits. | |
| 27 July 2008 | |
| Try this link, very helpful: http://www.socialsecurity.gov/retire2/agereduction.htm | |
| 27 July 2008 | |
| There is no earnings limitation the year in which a person reaches full retirement age. Taking the early retirement benefit beginning in January of that year will result in a permanent reduced monthly benefit of a very small amount. This is more than offset by the monthly benefit received for the months from January through the month in which the full benefit would start. I know of one specific case where the person, who was working full-time, reached full retirement in June, gave up 2.2% of their full retirement benefit of $1,400 ($30/mo) but received 5 additional months at $1,370 per month by starting in January. The break-even on this is 19+ years. So the person will "lose" only if they live to be over 84 (65+19). Also, the benefit of a lower earning spouse is also affected by this strategy. One must plan this as it cannot be done retroactively. -- Larry Hess, CPA | Albuquerque, NM | Talk to me | |
| 27 July 2008 | |
| The current reductions for someone whose full retirement is age 66 are: 25% at 62; 20% at 63; 13.5% at 64 and 5% at 65. | |
| 27 July 2008 | |
| The year a SS recipient reaches full retirement age there is still an earnings limit for the months prior to reaching full retirement age. For 2008 this amount is $36,120. For every three dollars earned more than this limit, his/her SS is reduced one dollar. This differs from the normal dollar reduction for every $2 earned more than the limit in years prior to reaching full retirement age. From the month he reaches full retirement age to the end of the year there is no longer a limit. I believe this addresses the question the original poster was asking. | |
