Is Your Income Limited When Drawing Social Security?

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    Benefits and Working

    • A beneficiary's Social Security retirement and social security payments are reduced based on earnings and ages. As of 2011, Social Security retirement benefits are reduced $1 for every $2 a beneficiary earns over $14,160 if he is not at full retirement age, which is 66 if born after 1943 and 67 if born after 1960. The same income limits and reduction rates apply for survivor benefits but the retirement age is different. Under the survivors program, full retirement age is 66 if born after 1945 and 67 if born after 1962. In the year of the beneficiary's full retirement age, he can earn up to $37,680 during the months before reaching full retirement age without reductions to retirement or survivors incomes, but benefits are decreased $1 for every $3 earned over the limit. After reaching full retirement age, beneficiaries receive full benefits regardless of how much they earn.

    Other Incomes

    • If a beneficiary receives income payments from public sources such as workers' compensation programs or state temporary disability plans and Social Security disability benefits simultaneously, the combined amounts can reduce the Social Security income. The Social Security Administration reduces disability benefits dollar for dollar if the total amounts of the benefits exceed 80 percent of the pre-disability salary.

    Work Incentives

    • The Social Security disability program pays full benefits to you while you are returning to work. Beneficiaries are given trial periods, which last 60 months and are completed after nine months of earning $720 or working 80 or more hours in their business. They are next given a period of extended eligibility that lasts 36 months. Beneficiaries receive no disability benefits during months with earnings over $1,000, or $1,640 if they're blind.


    • Incomes from working, stock dividends and bank interests cause Social Security benefits to be taxed by the Internal Revenue Service. For example, if a beneficiary's total incomes, which include wages and other taxable compensation plus one-half of Social Security benefits, exceed $25,000 per year, up to 50 percent of his Social Security payments are taxed at regular income tax rates. Up to 85 percent is taxed if the income tops $34,000. If beneficiaries are married, up to 50 percent of their Social Security benefits are taxed if their combined household incomes exceed $32,000 and up to 85 percent if their household incomes surpass $44,000 per year.

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