Limits for Work Income While Taking Early Retirement Benefits

Social Security Administration regulations allow you to start receiving retirement benefits before you reach the full retirement age. If you continue to work after you start to receive benefits, your earned income may affect the amount of your Social Security check. In addition, depending on how much you earn, the Internal Revenue Service may consider part of your retirement benefits taxable income when you also have earned income.

Early Retirement

You can start Social Security when you turn 62. If you start benefits early, however, and if you have compensation from working that exceeds an annual limit set by the Social Security Administration, your benefit amount will be reduced. This rule applies only until you reach full retirement age. When you reach full retirement age, there is no limit on how much work income you can have and still receive the full benefit amount. If your early benefits have been reduced due to work income, they will be no longer be reduced when you reach full retirement age, regardless of your earnings.

Benefit Reduction

You can determine whether your benefits will be reduced if you take early retirement benefits and continue to work. If you earn more than the annual Social Security Administration limit on earnings, subtract from your benefits one-half of the amount by which you exceed the limit. For example, in 2012 the SSA limit was $14,640. If you earned $21,000, the difference was $6,360. Your benefits would be reduced by $3,180 or $265 per month.

Taxable Benefits

Whether you are taking early retirement benefits or you’ve reached full retirement age, the IRS may tax some of your Social Security benefits depending on how much you earn. To find out, add one-half of your annual benefit amounts to your gross taxable income. If you are married and file a joint return, at least half of your benefits will be taxable if the total is over $32,000. If you are single, a qualifying widow or widower, or head of household, the limit is $25,000.


Taking retirement benefits early can be costly even if you stay under the Social Security Administration and IRS limits, and even if you don’t work at all: your benefit amount will be permanently reduced, depending on how far you are from full retirement age. For example, if you were born during a year in which you reach full retirement age at 66, but you start benefits when you turn 62, the reduction is 25 percent. Even after you reach full retirement age, you will continue to receive this reduced amount.

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

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