How Much Can You Earn While Drawing Social Security Benefits?

by Rod Howell

    You’re entitled to your Social Security benefits even if you’re earning a paycheck. However, there are limits to how much you can earn before your benefits are reduced or terminated. The Social Security Administration has income limits for all three benefit programs and for the Supplemental Security Income program. These income limits also apply to all family members drawing benefits from your record.

    As of 2012, if you’re not at full retirement age, you can earn up to $14,640 per year without the SSA reducing your retirement or survivors benefits. Your benefits are reduced $1 for every $2 you make over this limit. If you’re working during the year you reach full retirement age, which is based on year of birth, you can earn up to $38,880 in the months preceding your birthday month with no benefit reductions. However, your benefits are decreased $1 for every $3 you earn over the limit during that time period. There are no income limits once you reach full retirement age.

    If you’re getting disability benefits, you can earn up to $1,010 per month without losing your benefits as of 2012. If you are blind, the amount you can make increases to $1,690 a month before your benefits are terminated. Different rules apply if you’re 55 or older and considered blind. You can make over $1,690 and still keep your eligibility if your current job requires less skill than your previous job. Your benefits are suspended for the months you make over the limit, and you get your full amount during months you make less.

    Your earned income reduces your SSI benefits almost immediately. As of 2012, the first $85 of your monthly earnings is not counted as income for SSI purposes. However, one-half of your earned income afterwards is counted and your benefits are reduced dollar for dollar. For example, if your gross monthly income is $400, $157.50 is used to reduce your $698 federal SSI monthly benefit.

    If you get disability and pay for transportation and/or equipment to do your job, the amount of these expenses won’t count against your income limit. Also, your earnings can cause the taxation of your benefits. As of 2012, if you’re single and the total of your earned income and one-half of your Social Security benefits top $25,000 per year, 50 percent of your benefits are taxed at normal income tax rates. Up to 85 percent is taxed if your combined income exceeds $34,000 a year. If you’re married, the IRS combines both spouses’ incomes to determine the taxability of your benefits. Up to 50 percent of your benefits are taxed if the annual household income is over $32,000. If the annual household income tops $44,000, 85 percent of your benefits are taxed.

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    About the Author

    Rod Howell is a writer living in Charlotte, N.C. He graduated from Thaddeus Stevens College with an associate degree in administration in 2000. He published the book "Capitol Conspiracy" and regularly contributes to a blog as well as various other websites, drawing frequently from his experience as an insurance agent.

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