Working part-time while taking Social Security
Based on a recent episode I would like to get clarification on working part-time while taking Social Security. Would I pay a penalty based on what I earn each month or an annual basis if my income exceeds the Social Security income limit? Do you have a reference I can use to lookup this information?
Terry Says
Once you reach full retirement age there is no “earnings penalty” for working. But if you earn enough, at some point part of your Social Security benefits may be taxable as ordinary income.
Read this from Social Security: https://www-origin.ssa.gov/benefits/retirement/planner/taxes.html
Before your full retirement age:
If you’re younger than full retirement age during the whole year
Earnings cap: The limit is $22,320 in 2024.
What gets held back: 50% of anything you earn over the cap.
How it works: The Social Security Administration deducts $1 from your Social Security check for every $2 you earn above the cap. For example, $23,320 of earnings would generate a $500 reduction in a person’s Social Security retirement benefit for the year
What people don’t realize, though, is those amounts deducted are ultimately factored back in by the earnings formula. So if you’re collecting SS before full retirement age, don’t let it deter you from earning extra money.
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However, you can still get full Social Security checks if for the remainder of the year after you retire you earn less than $1,860 a month and don’t spend more than 45 hours a month on a small business (15 hours if it’s a “highly skilled occupation”)
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After that first year, you’re subject to the annual limit until you hit full retirement age.
