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Encino Elder Attorney: The Pitfalls of Working While Receiving Social Security Benefits

Senior woman hugging her husband who is on the bench

Working past retirement age is a requirement for some seniors, since Social Security benefits and retirement savings often cannot keep up with the cost of living. Whether it’s working in your previous career or taking on a new job, seniors must be aware of the eligibility requirements needed to keep receiving Social Security benefits until they reach full retirement age.

As seniors work while collecting early Social Security benefits, their earned income must stay below $1,420 a month (per 2018), which comes out to $17,040 per year. If this income limit is surpassed, the amount of the monthly Social Security check is reduced by one dollar for every two dollars earned over the limit.

However, there are exceptions to consider. The first is full retirement age, which is 66. Once a senior reaches age 66, they can collect their full Social Security benefits and also work without worrying about income limits. An additional exception to this rule applies if the senior will turn 66 during this calendar year. If so, the monthly income limit is increased to $3,780 ($45,360 for the entire year) and the penalty for exceeding the limit is one dollar for every three dollars earned over the $3,780.

The second exception is if the senior is self-employed. In this case, the Social Security Administration examines how many hours were worked in a month to determine if the senior provided “substantial services.” If the amount of hours worked in a month are more than 45, or between 15 and 45 for a skilled occupation, the Social Security Administration may decide to reduce the monthly benefit amount.

The benefits lost due to exceeding income limits are not necessarily lost forever, though. The Social Security Administration will take another look at benefits once the senior reaches full retirement age, taking into account any benefits lost because of earned income and will make partial payments to make up the difference. On average, it takes about 15 years to reclaim the entire amount of lost benefits.

If you would like to get more information about retirement and Social Security planning, or if you’d like to have a review of your existing plan to make sure it fits your current situation, please set up an appointment at our Encino elder law office by calling (818) 905-6088.

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