The social security limits by earnings
For clients under full retirement age, $1 in benefits will be deducted for each $2 in earnings above the annual limit ($13,560 for 2008, indexed for inflation each year).
- In the year they reach full retirement age, benefits will be reduced $1 for every $3 over a different annual limit ($36,120 for 2008, indexed for inflation each year) until the month of full retirement age. Then the earnings will no longer affect the amount of monthly benefits, no matter how much they earn.
In other words, there are no social security limits on eranings once you pass full retirement age you could earn $1 million annually and still collect full social security benefits.
Most people think that they get the largest payment automatically. Not true. You need to make choices when you apply and if you make the incorrect choice, you get a smaller check -- for life. Even if you already receive Social Security Benefits, you may be able to change your selections.
Social Security Limits on Benefits by Age
No matter what your full retirement age is, you may start receiving benefits as early as age 62. But there are social security limits and reductions if you start benefits prior to full retirement age as shown below.
Note: If you were born on January 1st of any year you should refer to the previous year in the chart below. |
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1937 or earlier |
65 |
36 |
.555 |
20.00 |
.694 |
62.50 |
1938 |
65 |
38 |
.548 |
20.83 |
.679 |
62.92 |
1939 |
65 |
40 |
.541 |
21.67 |
.667 |
63.34 |
1940 |
65 |
42 |
.535 |
22.50 |
.655 |
63.75 |
1941 |
65 |
44 |
.530 |
23.33 |
.644 |
64.17 |
1942 |
65 |
46 |
.525 |
24.17 |
.634 |
64.58 |
1943-1954 |
66 |
48 |
.520 |
25.00 |
.625 |
65.00 |
1955 |
66 |
50 |
.516 |
25.84 |
.617 |
65.42 |
1956 |
66 |
52 |
.512 |
26.66 |
.609 |
65.84 |
1957 |
66 |
54 |
.509 |
27.50 |
.602 |
66.25 |
1958 |
66 |
56 |
.505 |
28.33 |
.595 |
66.67 |
1959 |
66 |
58 |
.502 |
29.17 |
.589 |
67.08 |
1960 and later |
67 |
60 |
.500 |
30.00 |
.583 |
67.50 |
|
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Social Security Limits on Benefits by Earnings while working
If you earned the maximum amount of social security taxable eranings for the 35 years prior to retirement, the maximum benefit you could receive in 2008 is $2185 per month (at full retirement age). Use the table above to reduce this for those who start benefits prior to full retirement age..
Summary
Knowing how to manage your finances, even your social security decisions, is a challenge. You can find other related information in our blog Retirement Income.
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INCOME LIMITS ON EARLY RETIREMENT-
IS THE LIMIT APPLIED TO GROSS WAGES OR ARE DEDUCTIONS ALLOWED FROM GROSS INCOME BEFORE PENALTIES ARE APPLIED?
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