How much money can I make working after collecting Social Security at age 62?

It is important to note that upon receipt Social security benefits, there are no limits on the amount of money you can earn. The main concern for most, however, is that these benefits will be reduced by exceeding the annual income limit set in retirement.

In 2023, the revenue cap to be maintained Full Social Security benefits are $21,240. Earnings up to this amount will not affect the amount of your monthly benefit. However, when you’re considering applying for Social Security before you reach full retirement age, it’s extremely important to keep in mind some specific aspects that may affect the amount of benefits you receive.

In this context, if you decide to apply for benefits before full retirement age, you will be subject to the income limit, which in 2023 is $21,240. If your income exceeds this limit, your monthly benefit will be reduced by $1 for every additional $2. It is essential that you understand these terms when making decisions about when to start receiving Social Security.

Social Security Income Limit

If you claim benefits before reaching full retirement age, you will be subject to the earnings limit, which varies annually and is $21,240 for 2024.

Social Security Income Limit
Social Security Income Limit

If your earnings exceed this amount, you will receive a $1 reduction in your monthly benefit for every additional $2 earned over the limit. So, for example, earning $21,242 will reduce your monthly Social Security check by $1 compared to what you would have otherwise received, while not exceeding that limit will not affect your benefits.

However, the dynamic changes in the calendar year in which you reach full retirement age. For those who reach that milestone in 2024, the earnings limit rises to $56,520.

In addition, benefits will be reduced by only $1 for every $3 earned above this limit, marking an adjustment in terms as you approach full retirement.

Here are some key facts about the income limit:

  • The limit only comes into effect if you decide to apply for Social Security before you reach full retirement age.
  • The earnings limit increases, reaching $56,520 in 2023, the calendar year you reach full retirement age.
  • Starting from the month you reach full retirement age, the income limit is removed. Your benefits are no longer reduced regardless of your income.
  • The income limit applies specifically to wage and salary income or self-employment income. Pension, annuities and investment income are not taken into account in this calculation.

Special rule for your first year of retirement

If you decide to to retire in the middle of the year and you’ve already exceeded the income limit, it’s critical to consider a special rule that applies in your first year of retirement, especially if you claim your benefits before reaching full retirement age.

Let’s imagine that at age 62 you retire after working part of the year, say until August, and you’ve already earned $45,000. Despite exceeding the annual limit by $23,760, your Social Security benefit will not be reduced as long as the additional monthly income not to exceed or equal to 1/12 of the income limit for 2023.

In other words, you’ll receive your full payment each month as long as you don’t exceed the additional $1,770 in monthly earnings. This particular scenario is intended to ease the transition in the first year of retirement by allowing you to receive your benefits without significant penalties.

It is important to note that the reduction caused by the income limit is temporary and recoverable over time. When you reach full retirement age, your benefit increases (although not immediately) to compensate for the reduction caused by the income limit.

It is critical not to confuse the early filing reduction with the earnings limit reduction. Include in Social security early leads to a permanent reduction in benefits compared to waiting until full retirement age.

Remember that your benefit amount is based on your 35 years of highest earnings. If you continue to work while receiving Social security, you can increase the amount of your benefit. Earning more than any of your previous 35 highest years will increase your base sum assured.

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