Social Security Earning Limits

Social Security Earning Limits and Losing Benefits

People receiving Social Security benefits can have earning limitations where benefits are taken away. It is important to know these limits and stay below them. The limits for 2007 were:

· Starting at Age 62, income during years prior to retirement = $12,960/year without a penalty. If above this income level a $1 loss of benefit is incurred for every $2 above the limit.
· Income in the months of the year prior to attaining normal retirement age = $34,440 without a penalty. If above this income level a $1 loss of benefit is incurred for every $3 above the limit.
· Income after normal retirement age = No limit on the amount of income.

This limit is increased annually at the rate of inflation. The 2008 limits were increased above the level of 2007. The limit for 2009 will be higher than that for 2008.

What happens to your Social Security Benefit at retirement if you continue to work and receive benefits? No significant impact since you continue to pay FICA and Medicare taxes while you are working.

Bottom Line: If you are at least 62 years of age, working and can receive Social Security benefits, even at a reduced level, you should do it. Contact your local Social Security office for details. What do you do with the extra money? Use it to prepare for retirement and do things like pay off debt or invest for the future.