How Your Earnings Affect Your Benefits

If you receive Social Security benefits before you reach your full retirement age, the law limits the amount of money you can earn and still collect all your benefits. This provision affects people who collect Social Security retirement, dependents or survivors benefits, and the amount of the limit changes every year. (People who work and collect disability have different earnings requirements and should report all their income to Social Security.)

In 2000, Congress changed the law that determines what happens when you work and get benefits at the same time. While you're working, your benefit amount will now be reduced only until you reach your full retirement age, not up to age 70 as in the past.

We will use the following formula to determine how much your benefit must be reduced;

• If you are under full retirement age when you start getting your Social Security payments, $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2008, that limit is $13,560.

• In the year you turn full retirement age, a different limit applies but only to your earnings up to the month you reach that full retirement age. $1 in benefits will be deducted for each $3 you earn above the limit during that time. For people born in 1942 who reach age 66 in 2008, this limit is $36,120.

• Starting with the month you reach full retirement age, you will get your benefits with no limit on your earnings. That way,we can see whether you also may receive some or all of your benefits for the months before you reach full retirement age.

To determine whether your earnings are over the limit, we count only the earnings you make from a job or from your net profit if you're self-employed. This includes compensation such as bonuses, commissions and vacation pay. It doesn't include pensions, annuities, investment income, interest, Social Security, or veterans, military or other government benefits.

Here's an important point: When you continue to work while you are getting benefits, we check your record each year to see whether those additional earnings will increase your monthly benefits. If there is an increase, we will send you a notice of your new benefit amount.