Can You Be Penalized for Working While Collecting Social Security?
For most people, income from Social Security alone will not be enough to maintain the standard of living they have become accustomed to. Many will have to consider working a job to supplement their Social Security income, but they may be hesitant out of fear of losing their Social Security benefits. The good news is there is no reason to worry about losing your Social Security benefits if you work after retirement.
Can You Really Work and Collect Social Security?
If you have reached the full retirement age of 66 or older (67 if you were born in 1960 or later), you can work and earn as much as you want and still collect Social Security without penalizing your benefits. If you retire before age 66, you can still work and receive Social Security. Your monthly benefit will be reduced, however,if you make over a specific amount each year. For 2016, the income limit for working Social Security recipients is $15,720, or $1,310 a month. Your monthly Social Security is reduced by $1 for every $2 earned over the limit.
In year you turn 67, your Social Security benefit is reduced by $1 for every $3 earned over a different yearly limit–$41,880 in 2016–until the month you turn 67. Then you will receive your full Social Security benefit regardless of how much you earn. If you are under 67 and some of your benefits were held because you earned more than $15,720 a year, Social Security will recalculate your benefits a year after you reach full retirement age and increase your monthly benefit to account for the months you received reduced benefits or no benefits at all.
Social Security and Self-Employment
Self-employed Social Security recipients may receive full benefits for any month during which they did not perform “substantial services”. If you work more than 45 hours in any given month, you will not receive benefits for that month. If you work less than 15 hours in any given month, you would be considered retired and still receive your benefit. If you work between 15 and 45 hours per month, you could be considered not retired and not receive a benefit for that month, depending on the nature of work you performed and other criteria. The criteria are explained in greater detail on the Social Security Administration’s website.
Income from self-employment counts when you receive it, rather than when you earn it, unless you receive it the year after you became eligible for Social Security and you earned it before you became eligible. For example, if you began collecting benefits in May 2015 and you were paid in March 2016 for work performed before May 2015, it would not count toward your 2016 earning limit. If the money you received in March 2016 was for work you did after May 2015, it will count against your 2016 earning limit.
A Social Security Attorney Can Help
A Social Security attorney can answer any questions and/or concerns you may have regarding Social Security and how your benefits would be affected if you decide to work part- or full-time while collecting benefits. Call us today to schedule a free consultation with one of our attorneys here at the Law Offices of Dr. Bill LaTour.