Are you still working and ready to start your Social Security benefits? Do you know if and how your Social Security benefits may be affected by your earned income? If you find yourself in this situation, then this is the blog for you. Today we will be discussing how your Social Security benefits could be affected if you continue to earn income while in retirement.
Social Security imposes what’s known as an earnings test for workers who continue to have earned income while also collecting benefits. Income that exceeds the earnings test limit could result in withheld benefits, so it’s important to know the thresholds.
- First and foremost, you need to know your full retirement age (FRA) as defined by the Social Security Administration (SSA).
| If Your Year of Birth Is | Your Full Retirement Age Is |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
DATA SOURCE: SOCIAL SECURITY ADMINISTRATION
If you have already reached your FRA, then you don’t have to worry about any earned income impacting your benefits. You can earn as much as you’d like without having any of your Social Security benefits withheld. The earning test is applied if you are collecting benefits before reaching your FRA.
In 2022, if you are under full retirement age for the entire year, $1 will be deducted from your benefit payments for every $2 you earn above $19,560.
If you reach your FRA in 2022, then $1 will be deducted for every $3 you earn above $50,520. The SSA only counts your earnings up to the month before you reach your full retirement age, not your earnings for the entire year. In addition, the SSA will recalculate your benefit amount to give you credit for the months they reduced or withheld benefits due to your excess earnings. Remember, beginning with the month you reach FRA, your earnings no longer reduce your benefits, no matter how much you earn.
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