How Does the Annual Earnings Limit Affect My Payment?

Rules are different the first year that you claim benefits

by: Stan Hinden, from: AARP Bulletin, July 21, 2011

Q. I'm 62 and planning to take my Social Security starting Nov. 1. But this year I've already earned more than $14,160, the yearly earnings limit for retirees who are between 62 and full retirement age. How will this affect my benefits?

A. There's good news for you: Money you made prior to Nov. 1 won't count. In the year that you begin taking benefits, all that Social Security considers is any monthly earnings you have after you begin benefits. The monthly earnings limit is $1,180.

So, if you earn less than $1,180 in November or December, you'll get your full monthly benefit. If you earn more than $1,180 in November, you won't receive a monthly benefit for that month. The same applies for December.

For people who are self-employed, the rules are different and will be covered in a future column.

Starting in 2012, the annual limit of $14,160 will apply to any earnings that you have. To learn how this limit works, see my previous column "Can I Beat the Social Security Earnings Test?"

For more information on the issue of working, see the Social Security publication "How Work Affects Your Benefits."

You may also like: Protect Social Security. >>

Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Have a question for the Social Security Mailbox? Check out the archive. If you don't find your answer there, send a query.