Examples: When you work and reach full retirement age

Let's look at some examples:

• You begin receiving your Social Security benefits at age 62 in January 2008. At age 62, you are entitled to $800 a month in benefits ($9,600 for the year).

  You work and earn $21,560 ($8,000 over the $13,560 limit) in 2008. Your Social Security benefits would be reduced by $4,000 ($1 for every $2 you earned over the limit), but you would still receive $5,600 of your $9600 in benefits for 2008. ($9,600 - $4,000 = $5,600)

  1. You continue to work and earn more than the limit for the next three years. We continue to withhold benefits for 5 months each year due to excess earnings. In January 2012 we stop withholding benefits because you have reached full retirement age. At this point you will have received about $22,400 in benefits.

     We recompute your benefit amount to leave out the 20 months when we withheld benefits. Your $800 monthly benefit amount increases to $895. (If you had waited until full retirement age to start your benefits, the monthly benefit amount would have been $1,076.)

  2. You earn $13,000 in the first 6 months of 2009 and then you retire. Your total earnings for 2009 and the next two years are under the limit so we pay benefits for all 36 months. In January 2012 you reach full retirement age. At this point you will have received about $34,400 in benefits.

     We recompute your benefit amount to leave out the 5 months in 2008 when we withheld benefits. Your $800 monthly benefit amount increases to $829. (If you had waited until full retirement age to start your benefits, the monthly benefit amount would have been $1,076.)

• You are already age 65 at the beginning of the year but will reach full retirement age in August 2008. Your benefits are $800 per month ($9,600 for the year).

  You earn $62,000 during the year, with $38,130 of it in the 7 months from January through July.

  Your Social Security benefits would be reduced through July by $670 ($1 for every $3 of the $2,010 you earned above the $36,120 limit). After we deduct $670, you would still receive $4,930 out of your $5,600 in benefits for the first 7 months (January through July). You would get all $4,000 in benefits for the 5 months after you reached full retirement age (August through December).

  Even though you earned $62,000, you would still get $8,930 of your Social Security benefits in 2008.

  In 2009 we recompute your benefit to leave out the month when we deducted excess earnings. Your monthly benefit amount increases to $805 effective August 2008 and you will receive another $25 in benefits for 2008.

If you are eligible for retirement benefits this year and are still working, you can use our earnings test calculator to see how your earnings could affect your benefit payments.

Note: The examples above do not include cost-of-living increases or earnings added to your record after benefits started.

If you continue to work while you are getting benefits, we automatically check your record every year to see whether the additional earnings will increase your monthly benefit. If there is an increase, we will send you a letter telling you your new benefit amount.