Just like drinking and driving is a bad idea, sometimes working and receiving your Social Security benefit before Full Retirement Age (FRA) doesn’t mix.
If you are receiving a Social Security benefit and earning work income before you reach full retirement age, your Social Security benefit may be reduced.
Here is the language that Social Security uses to describe the benefit reduction:
In 2018, the annual earnings limit is $17,040 if you’re under full retirement age. If you will reach full retirement age in 2018, the limit on your earnings for the months before full retirement age is $45,360.
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.
As you can see, that doesn’t provide much work income before benefits begin to be reduced. For every two dollars of income over the threshold above one dollar of Social Security benefit is delayed/reduced.
If you elect your Social Security benefit and you are before full retirement age, the Social Security Administration will ask you to estimate your work income. They will use this information to determine the actual amount of benefits that they will distribute.
If you actually make more than you claim that you make, later IRS reporting to the Social Security administration will bring this to light. Once the discrepancy is known, you will receive a letter from the Social Security Administration outlining the number of months that you will forgo a Social Security benefit until the excess work earnings are made up.
If you absolutely need your Social Security benefit before full retirement age, make sure that your work income is below the income thresholds provided.
If you have any questions please feel free to contact me