Still Working and Receiving Social Security Benefits?

by | Aug 3, 2023 | Videos

If you are still working and receiving Social Security benefits you need to pay attention to how much income you are making because it may reduce your benefit.

In this week’s video, Casey details what the income limit is, how the benefit reduction is calculated and who it applies to.

There are many Social Security nuances like this that you need to be aware of when building your retirement plan.

Show Notes

Where Will Your Retirement Income Come From – Mullooly Asset Show

Receiving Benefits While Working – SSA.gov

Still Working and Receiving Social Security Benefits – Full Transcript

**Click here for a full downloadable PDF version of this video**

Casey Mullooly: If you’re receiving social security benefits and still working, you’re going to want to keep watching. Welcome back to the Mullooly Asset Show. I’m your host, Casey Mullooly, back with you two weeks in a row, and this week we’re going to talk about social security benefits.

So the way it works, social security is you work for your entire career. You pay into the social security system through your tax withholdings, and then you retire and you can start collecting that benefit.

So you can claim social security as early as age 62. But a definition that is crucial for all workers to know is full retirement age. It depends on when you were born and that full retirement age is either age 66 or 67, depends on what your birthday is. So you can claim at 62, but your full retirement age when you get that full benefit isn’t until age 66 or 67.

But what happens if you claim social security, but you’re still working, you still have earned income from a job? What happens to your benefits then?
Well, I’m glad you asked because this is a pretty important topic that we help folks with all the time. If you’re at full retirement age and still working while collecting social security benefits, your social security benefit will not be reduced at all.

But let’s say you claim when you’re 62, 63, 64, 65, you’re still working, your benefit is going to be reduced, and the limit is if you earn more than $21,240, your benefit is going to be reduced $1 for every $2 you earn over that 21,240 limit. And I know that that was confusing. So we’re going to walk through an example.

Let’s say Bob began receiving social security at age 62. So he’s not full retirement age. Bob is 62 and he gets a thousand dollars social security check each month. That’s $12,000 annually. Bob also works, and this year he earned $31,240.

That is conveniently $10,000 over that 21,240 limit. That means that Bob’s social security benefit is going to be reduced by $5,000. It’s reduced $1 for every $2 he earned over that limit. Again, if you’re full retirement age, your benefit will not be reduced at all. But if you’re under full retirement age, you’re that 21,240 income limit does apply.

So, there’s also a different limit if you turn full retirement age in this year, there’s another limit. But just for this video for simplicity’s sake, that 21,240 is kind of that magic number that you want to keep in the back of your mind when you are figuring out your cash flow and what income is going to be coming in and all of that stuff.

So these are the different kinds of nuances that go into retirement planning discussions that we have regularly with clients. It’s important to know this information when you’re building a retirement plan because the more accurate picture we get of your cash flow, the better we can project things like your portfolio distribution rate, your tax withholdings, and whether or not you’re going to have enough cash flow to cover those retirement expenses.

So the more accurate the picture we have, hopefully the less headaches and the less stress you’re going to have about your retirement finances. So that is going to do it for this week’s episode. Thanks as always for tuning in. We’ll be back with you next week.

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