If you were born between January 2, 1943, and January 1, 1955, then your full retirement age for retirement insurance benefits is 66. If you work and are at full retirement age or older, you may keep all of your benefits no matter how much you earn. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.
If you are younger than full retirement age during all of 2009, Social Security will deduct $1 from your benefits for each $2 you earned above $14,160.
If you reach full retirement age during 2009, Social Security will deduct $1 from your benefits for each $3 you earn above $37,680 until the month you reach full retirement age.
Benefit payments are made based on the projected amount of earnings that beneficiaries report to Social Security. If earnings will be different than what was originally estimated, it is important to let Social Security know as soon as possible so that payments can be adjusted accordingly.
These examples show how the rules would affect you:
• Example 1: You begin receiving Social Security benefits at age 62 in January 2009, and your payment is $600 per month ($7,200 for the year). During the year, you work and earn $20,480 ($6,320 above the $14,160 limit). Social Security would withhold $3,160 of your Social Security benefits ($1 for every $2 you earn over the limit). To do this, they would withhold all benefit payments from January 2009 to June 2009. Beginning in July 2009, you would receive your $600 benefit, and this amount would be paid to you each month for the remainder of the year. In January 2010, they would pay you the additional $440 they withheld in June 2009.
• Example 2: You are not yet full retirement age at the beginning of the year but reach it in November 2009. You earn $39,000 in the 10 months from January through October. During this period, Social Security would withhold $440 ($1 for every $3 you earn above the $37,680 limit). To do this, they would withhold your first check of the year. Beginning in February 2009, you would receive your $600 benefit, and this amount would be paid to you each month for the remainder of the year. They would pay you the remaining $160 dollars in January 2010.
Be aware also that, with your combined household income with your wife, your benefits will be subject to income tax. Be sure to plan for this in your tax withholding.
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