Social Security - earnings cap when collecting early

Parent Cafe
1

<p>I really dont want to call the SSA and i know someone here will have the answer.
There is a yearly earnings cap of $15,480 when working and also collecting early SS benefits before FRA.
This means that you can have EARNINGS up to that amount before your SS benefit is reduced.</p>

<p>If youre collecting, say 12,000 in SS per year, that $12,000 is not included in that $15,480 is it?
I’m hoping that you can EARN up to $15,480 working, IN ADDITION to collecing early benefits…
Tell me the truth!</p>

2

<p>You are correct. You can have employment income up to the salary cap.</p>

3

<p>The cap is for earnings. From the SSA site:
How earnings affect your benefits
You can continue to work and still get Social Security
retirement benefits. Your earnings in (and after) the month
you reach your full retirement age will not affect your
Social Security benefits. However, your benefits will be
reduced if your earnings exceed certain limits for the
months before you reach your full retirement age. (The full
retirement age is 66 for people born in 1943-1954 and will
gradually increase to 67 for people born in 1960 or later.)
• If you are younger than full retirement age, $1 in benefits
will be deducted for each $2 in earnings you have above
the annual limit ($15,480 in 2014).
• In the year you reach your full retirement age, your
benefits will be reduced $1 for every $3 you earn over
a different limit ($41,400 in 2014) until the month
you reach full retirement age. Then you get your full
Social Security benefit payments, no matter how much
you earn.
If you are younger than full retirement age and some of
your benefits are withheld because your earnings are more
than $15,480, there is some good news. When you reach full
retirement age, your benefits will be increased to take into
account those months in which you received no benefit or
reduced benefits.</p>

4

<p>Thanks, mamas!</p>

<p>I think I was getting the fact that the SS retirement benefit will be taxable on our return mixed up with the earnings cap info.
It did SEEM silly that SSA would count the benefit in the “earned income” amount…but ive misunderstood alot of SSA stuff, especially advocating for my adult disabled daughter.
Glad to hear this is in our favor.</p>

5

<p>If I retire at 64 and delay taking ss until my full retirement age of 66, do I still collect the same as if I retired at 66.</p>

6

<p>@DocT, Yes, but… you will not have income from 64-66 that might have added some small amount to your numbers if you had worked until 66.</p>

7

<p>My understanding is that the first year you start taking early SS the income limit does not apply to the income earned before the date you retire.</p>

8

<p>Why would they add anything if I’ve been maxed out for years?</p>

9

<p>If your earning for the wo years are higher than some of the earlier eaning included in SS calculation, they will replace lower eanings with higher ones. That results in a higher SS payment. </p>

10

<p>Does the cap apply when taking spousal benefit? </p>

11

<p>@Igloo, Yes the cap is on earnings for self or spousal (living or deceased) benefits; as I understand it, not for minor children’s benefits.</p>

12

<p>doc my understanding is they take your highest 35 years of earnings. If you have 35 max years the 2 zero years should have no impact.</p>

13

<p>I have heard mixed opinions on “earnings”. Could it include money withdrawn from traditional IRA? </p>

14

<p>I don’t think IRA withdrawals are included in the formula for SS income overage. Heavens…think about that. I’m betting there are many people who get more than $15,000 in IRA withdrawals after retirement and their SS is not affected.</p>

15

<p>IRA withdrawals are ‘taxable’ because they were placed pre-tax, but not earned in the year you are collecting SS</p>

16

<p>@musicmom, why are you collecting early? There are some good reasons to do so, but generally not when you’re still employed. Just curious. </p>

17

<p>Bob, not me, my DH.
In our case, its a family plan. DH is 62, Im 4 yrs younger. We have a disabled adult child that will live with us for awhile, maybe “forever”.<br>
DH will collect his modest SS early based on family longevity (or lack thereof) and health and work partime at several small jobs he loves until no longer fun or able. Maybe, hopefully many years.</p>

<p>We plan to clear small remaining mortgage debt in next four yrs and i will claim early at 62 also.
We will reevaluate at that point and i would continue working till FRA of 67 if necessary.
My SS will be much larger than DHs and i have pension and 403b.
I will be happy to call it a career after 40 yrs at 62 if i can.
We have lived modestly in a high cost of living area and hope to have the choice to age in place.</p>

18

<p>@musicmom, I’ve recommended the site so often that some must think I’m a shill (which I am not). <a href=“Http://Www.MaximizeMySocialSecurity.com”>Http://Www.MaximizeMySocialSecurity.com</a> lets you provide them with detailed earnings history (basically a copy and paste from the SSA site) and assumptions (where you could input longevity expectations based on family history). It then calculates the optimal family strategy (in my case, it was file early for me, kids filed for benefits on my record, wife files for spousal benefits at FRA, and then for her own benefits at 70). </p>

<p>It was worth every penny of the $40 they charge. If you’d rather figure it out yourself, for $10 get Mike Piper’s book: Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less. <a href=“http://www.amazon.com/dp/0981454283/?tag=oisidebar-20”>http://www.amazon.com/dp/0981454283/?tag=oisidebar-20&lt;/a&gt;. </p>

<p>In our case, if our assumptions hold up, we will have improved our SS by a significant 5-digit amount. </p>

19

<p>Or you can check the book out from local library first before buying it.</p>

20

<p>True enough Dr. Google, if they have it. It’s only 100 pages or so; you could read it while sitting there. </p>