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Working While Collecting Social Security Benefits


It is possible to collect benefits and work, but there are some rules you need to consider. It may have to do with your age or the type of benefits that you will collect. Knowing what is possible and not possible will be an important part of making the right decision for your future. Here are the most important things to consider:

  • Are you full retirement age? The current retirement age is 66 (for most people), but you can begin collecting some of the benefits at the age of 62. However, if you're younger you will have a reduced benefit based on the amount you earn.
  • What is the benefit limit? For those below the full retirement age for the entire year, $1 will be deducted from your payment benefits for every $2 earned over the annual limit. In 2016, that annual limit is $15,720. When you reach full retirement age, a deduction of $1 in benefits will occur for every $3 you earn. If you reach full retirement age in 2016, the limit on your earnings for the months before full retirement age is $41,880.
  • What are considered earnings? Earnings are calculated only on the wages you make from your job. If you are self-employed, this is just the net earnings. Bonuses, commissions and vacation pay are also included. But pensions, annuities, interest and investment income are not included. Veterans or other government military retirement benefits are also not considered.
  • What happens to new contributions? While you continue to work, you will continue to pay into Social Security as well. There may be a case where your benefits will increase based on your contributions.
  • Do you need to report a change? If you expect the amount you will earn to be different than the amount you originally reported, you must let the Social Security Administration know right away. This cannot be reported online, so you will need to call the office to make this change.

These are just the basics, and it can get very complicated. Also, regulatory and legal changes may alter any of the above numbers from year to year. Before making a decision about simultaneously working and collecting benefits, consult with a financial professional so there are no unpleasant surprises at tax time.


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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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