Mailbag Monday: How Work Impacts Social Security Benefits - Jean Chatzky - Making money make sense
< Back

Mailbag Monday: How Work Impacts Social Security Benefits

mailbagmondayI’m 64.  Is it true that you can’t draw Social Security if you make over $14,000 a year?

— Paula

It’s not true that you can’t take Social Security benefits if you earn over $14,000 a year, but it is true that working (and in particular, earning an income from that work) can reduce your benefit amount if you haven’t reached full retirement age.

Here’s how that works: Once you hit full retirement age — find out what yours is here — you can earn as much income as you want without compromising your benefits. But if you want to take benefits prior to that and continue to work, you may temporarily give up a portion of your monthly benefit.

Why do I say temporarily? Because this isn’t money lost forever. If your benefit is reduced because of work income, it will be increased once you hit full retirement age to account for the amount that was withheld. So as the end result, you’ll break even, but you’ll have to wait longer to receive some of your benefits.

As for how much you’ll lose, that changes every year. But in 2013, if you are younger than full retirement age and take benefits, Social Security will deduct $1 from your benefits for every $2 you earn above $15,120. And if you turn full retirement age during 2013? This doesn’t apply to you because you’re 64, but if it did, the deduction is less severe: Social Security will deduct $1 for every $3 you earn above $40,080 until the month you reach full retirement age.

To read more about this, and see a few examples, visit this Social Security Administration publication.

Subscribe to my free weekly Newsletter

We collect, use and process your data according to our Privacy Policy.