How Much Money Can You Make After You Retire Before Your Benefits Are Reduced?
Financial and Retirement Planning Information -
for Beginners
When a person retires, we think of them as no longer working. In today's climate, however, many people continue to work, or return to work after they "retire". They may be doing the same thing they did before they retired, or they may be doing something entirely new.
So... if a person retired, why on earth would they go back or continue to work? There are many reasons, but the main ones are: lack of money and boredom.
Many people thought it would be so nice when they no longer had to work, but once that became a reality, they found it wasn't so nice after all. What can you do around the house for the 9 to 10 hours a day that you used to be gone? You can only nap so much. You can only visit your friends so often.
You can only go shopping so much. Well, you could do some of those projects that you said you would do "some day", but eventually you will run out of things to do. Now what? Go back to work! You can pick up some extra money and fill those long hours at the same time.
You can go back to your former line of work, or you can find something new to do. Maybe your job was welding, but you always liked working in the dirt. Maybe you could go to work as a gardener or a landscaper.
You might like to teach and could hold some classes in your former field. Who would know more about that job than you?
Too many people are forced to go back to work, whether they want to or not because of finances. Maybe you had all of your retirement funds tied up in the stock market. Perhaps you just didn't save enough and can't afford to live on social security alone. Maybe you have enough saved to live on, but you have a lot of outstanding debts that you have to spend your savings on, or you have a lot of unexpected medical bills, or your wife ran off with the guy next door and took all of your money with them.
Whatever the reason, you now find yourself in a position where you have to work. So how much are you allowed to make while drawing social security before you are penalized?
The Social Security Administration (SSA) uses the formulas below, depending on your age, to determine how much your benefit must be reduced:
Full Retirement Age (FRA): Age 66 and 6 months for people born January 2, 1957 through January 1, 1958. Unlimited earning. Do deductions on any amount you earn.
If you are under: normal (or full -- retirement age (FRA) when you start getting your Social Security payments, $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2019 that limit is $17,640. Remember, the earliest age that you can receive Social Security retirement benefits remains 62 even though the FRA is rising, but your benefits will be greatly reduced at ages 62 to FRA.
In the year you reach your FRA: $1 in benefits will be deducted for each $3 you earn above a different limit, but only counting earnings before the month you reach FRA. For 2019, this limit is $46,920.
Starting with the month you reach FRA:, you will get your benefits with NO limit on your earnings.
If a child or spouse on your record works while receiving benefits, the same earnings limits apply to him or her as apply to you. If your child or spouse is eligible for benefits this year and is also working, you can use our earnings test calculator to see how those earnings would affect the child's benefit payments. (Your child's or spouse's earnings affect only his or her own benefits. They do not affect your benefits or those of any other beneficiaries on your record.)
If you retire during the year:
When entitlement to benefits begins or ends during the year, many people work in months before or after entitlement. $1 in benefits will be deducted for each $3 you earn above a different limit, but only counting earnings before the month you reach FRA. For 2019, this limit is $46,920.
For complete details see: How Work Affects Your Benefits
Note: There are different rules for people receiving Social Security Disability:
See: Substantial Gainful Activity for details.
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