Many people are eager to know how much they can earn and still keep receiving their Social Security benefits. Unfortunately, there’s no simple answer, as the social security income limits depend on the specific situation of each person. In this article, we’ll dive into the details, so you can have a better understanding of how Social Security benefits work and what income limits apply.
Understanding Social Security Benefits
Social Security benefits are essentially a form of retirement income that you receive from the federal government. They’re intended to help support people who have retired after a lifetime of work. To qualify for Social Security, you need to have worked for at least 10 years, earning enough credits to be eligible. The amount of Social Security benefits you receive is based on how much you earned while you were employed.
Pro Tip: To learn more about how to qualify for Social Security benefits and how these benefits are calculated, check out our article on “How are Social Security Benefits Calculated?”
Income Limits for Receiving Social Security Benefits
Now, let’s talk about the income limits for Social Security benefits. In general, if you earn too much money, Social Security may reduce or even suspend your monthly benefits. The amount you can earn varies depending on whether you have reached full retirement age or not. Here are the details:
Full retirement age is the age at which you can start receiving your full Social Security benefits. For those born between 1943 and 1954, it’s 66 years old. For those born in 1960 or later, it’s 67 years old. For people born between those years, the full retirement age falls somewhere in between.
Earning Limits Before Reaching Full Retirement Age
If you haven’t yet reached full retirement age, there are income limits to what you can earn without having your benefits temporarily withheld:
- If you’re under full retirement age for the entire year, Social Security will deduct $1 from your benefits for every $2 you earn above the annual income limit. For 2021, that limit is $18,960.
- In the year that you reach full retirement age, you can earn up to $50,520 in 2021 without having your benefits reduced. If you earn more than this amount, Social Security will temporarily withhold $1 for every $3 you earn above this limit. However, you’ll get this money back in the form of increased benefits when you reach full retirement age.
Earning Limits Once You Reach Full Retirement Age
Once you reach full retirement age, you can earn as much money as you want without having your benefits reduced or suspended.
How Other Income Affects Social Security Benefits
So far, we’ve talked about earned income affecting your Social Security benefits. However, other sources of income can also impact your benefits, such as pensions and investments. Here’s what you need to know:
Pensions and Retirement Accounts
If you receive a pension from a job not subject to Social Security taxes (such as a government job), the GPO (Government Pension Offset) rules will apply. This means that your Social Security spousal or survivor benefits may be reduced by up to two-thirds of your pension amount.
On the other hand, if you have a 401(k) or IRA account and withdraw money from it, that income will not affect your Social Security benefits.
Also, investment income does not affect your Social Security benefits in most cases. However, if you sell investments and earn a capital gain that pushes your income past the income limits, it could reduce or suspend your benefits temporarily.
As you can see, Social Security income limits are complex, but it’s important to understand them so you can plan your retirement accordingly. Be sure to check with the Social Security Administration for the most up-to-date information on how your specific situation could affect your benefits. And remember, even if your benefits are reduced temporarily, you may receive more money later to compensate for the reduction.
Most Common Questions About How Much You Can Make and Still Get Social Security Benefits
Can I still work and receive Social Security benefits?
Yes, you can work and receive Social Security benefits, but if you’re younger than full retirement age, there are income limits. If you earn more than the annual limit, Social Security may temporarily withhold some of your benefits.
Can I earn any income after I reach full retirement age?
Yes, you can earn as much as you want without having your benefits reduced or suspended. After full retirement age, there are no income limits whatsoever.
How does other income affect my Social Security benefits?
Other sources of income, such as pensions and investments, may affect your Social Security benefits. Depending on the type of pension you receive, the amount of your benefits may be reduced. However, withdrawals from 401(k)s and IRAs do not affect your benefits. Investment income does not affect your benefits in most cases, but capital gains could temporarily reduce or suspend your benefits.