Hopefully you now have your Social Security statement and have reviewed your 35 years of earnings. It is time to start looking at a start time for benefits……especially for couples, coordinating their start times will provide many opportunities to boost cumulative lifetime income. Before you do that, let’s discuss work and earnings limits while drawing Social Security.

What is considered work? Simply said, wages and self-employment (net) are considered work. Work is not money from rental properties, investments, IRA, 401K or deferred comp, stock option income, etc. Early-outs, severance pay and vacation pay-outs received AFTER you retire are normally NOT wages. If you work for wages, income counts when it is earned, not when it is paid. However, they do count an employee’s contribution to a pension or retirement plan if the contribution amount is included in the employee’s gross wages. If you are self-employed, income counts when you receive it as well – not when you earned it. An exception is if it is paid in a year after you become entitled to Social Security and you earned it before you became entitled to benefits.

Earning Limits

Younger than Full Retirement Age

$15,480 per year
$ 1,290 per month
Social Security benefits are withheld at $1 for
every $2 over the annual limit

The year you reach Full Retirement Age   

$41,400 per year
$3,450 per month
Social Security benefits are withheld at $1 for
every $3 over the annual limit

FULL RETIREMENT AGE

NO LIMIT ON EARNINGS

Also, please be aware that your spouse’s spousal benefit will also be withheld if you earn greater than the annual earnings test limit.  
In the year you reach full retirement age (66 for most of us reading this article) a more generous earnings limit applies.  Social Security will only count earnings before the month you reach full retirement age and in 2014 that limit is $41,400.  Starting with the month you reach full retirement age, there is no limit on your earnings.

There is a huge difference between when you want to retire, and when a report or a free calculator tells you to retire.  We strive to work one-on-one with couples to determine the best choice for their life, based on their work situation, their health, family situations and such.  You can contact Roy or Diane Thompson, at 601-954-0699 or email us at dthompson@pillarsllc.com or rthompson@pillarsllc.com.