Helpful Tips for Claiming Social Security and Continuing to Work
If you plan to take Social Security benefits and continue to work, that might reduce your benefits or cause your Social Security income to be taxed.
BENEFITS REDUCTION:
• The earliest age at which you’re eligible to claim Social Security benefits is 62. If you claim your benefits and continue to work, the Internal Revenue Service imposes earnings restrictions until you reach your Full Retirement Age.
• If you claim your Social Security benefit before you reach Full Retirement Age, and have earned income in excess of what the IRS allows, your benefits will be reduced by $1 for every $2 of earned income over the limit.
• The year you reach Full Retirement Age, the limit for earned income rises. This means for every $3 earned over the IRS limit, your benefit will be reduced by $1 until the month you reach your Full Retirement Age. After that, there are no earnings limits and no benefit reductions based on your earned income.
TAX EFFECTS:
• Social Security benefits are subject to federal income taxes above certain levels of “combined income.”
• Combined income is the total amount of your adjusted gross income (AGI) plus your nontaxable interest and one-half of your Social Security benefits.
•If your combined income exceeds a certain level, your Social Security benefits could be subject to federal income taxes. These range from 50% to 85% of your Social Security benefit, depending on the actual amount of your combined income.