If you receive Social Security benefits, there are rules as to how much money you can earn beyond those benefits without having your benefits reduced. The rules are different for different kinds of beneficiaries. For example, people at full retirement age can earn twice as much as those below it before their benefits are impacted.
In 2011, the base amount that a person can earn while still receiving Social Security benefits is $1,000 a month for people under the full retirement age. For those at full retirement age, the amount increases to $2,000 a month. Full retirement age has long been 65, but for those born in 1938 it gradually increases until it hits 67 for people born after 1959.
How Benefits Shrink
For beneficiaries who make more than the allotted amount, benefits are reduced by $1 for every $2 over the amount. For example, if you receive $800 a month in Social Security benefits and you begin making $1,500 a month, your benefits would be reduced by $250 a month to $550. In the year you reach full retirement age, $1 in benefits will be taken out for every $3 in income until the month you reach retirement age when you receive full benefits.
If you receive disability benefits and want to try working, you can earn unlimited income in nine months within a 60-month rolling period without your benefits being affected. The nine months do not have to be consecutive but you do have to still have the limiting disability for which you receive the benefit. This is considered a "trial period." If your income is what the agency considers "substantial," benefits will stop after the trial period. Substantial income as of 2011 is $1,000 a month for most people; $1,640 a month for people who are blind.
The Good News
If you receive retirement benefits or survivor benefits from a spouse or parent who died, and your benefits are reduced because of your income, the amount they were reduced will be added to your benefit later. So though you lose the money prior to full retirement age, it is restored to you when you reach full retirement age.
- Social Security Administration: Effects of Working and Receiving Social Security Retirement Benefits
- Social Security: Retirement Age Increase
- Social Security Administration: Disability Benefit Earnings Limit
- Social Security Administration: What You Need to Know When You Get Retirement or Survivor's Benefits