While many people look forward to their golden years and a relaxing life in retirement drawing their hard earned pension and Social Security retirement benefits, the reality is that for large numbers of people, the pension, investments and the Social Security Retirement (SSR) check are not enough. Some Social Security recipients make the decision to go back to work, some full-time, others part-time. Depending on their age, this can be a decision that will cost them some of their benefits. Before going back to work, even if it is part-time, a person drawing their SSA check before their full retirement age needs to know the impact of earnings on their Social Security retirement benefits.
The first thing a person who is drawing a SSR check needs to know before returning to work is their full retirement age. Anyone born before January 1, 1943 has a full retirement age of 65 and does not need to worry about early retirement earnings limitations. For those born January 2, 1943 through January 1, 1955, the full retirement age is 66. For those in this group that were 66 or older on January 1, it doesn’t matter how much is earned because they will get their full SSR check with no deduction for earnings.
Those who do get a reduction in benefits fall into two categories: Those who reach full retirement age in the current year and those who will be under full retirement age for the entire year.
For those who will reach full retirement age in the current year, the Social Security Administration will withhold $1 for every $3 earned above $38,880 (for 2012, future years will have higher amounts). For those who will be under full retirement age for the entire year, the Social Security Administration will withhold $1 for every $2 earned above $14,640 (for 2012, future years will have higher amounts). In either case, knowing these rules ahead of time makes retirement planning easier and safer.
The Social Security web site has examples of how this works and for future years the SSA website is also a good place to visit because it also has a calculator where an individual can calculate their Social Security retirement benefits. This can help a person decide on when the best time to retire is and with understanding what rules can help a person to make the decision that is best for them.