Effect of SS payments while still working

[FREE866]

My sister is 63 and 1/2. She's considering starting to take SS and she still will work , but less hours.
My question is---will she still pay SS taxes out of her wages ? I think the answer is yes but what effect will that have on her whole SS picture? assuming that could increase her monthly benefit payout somehow.


Thanks!

 

[SecondCor521]

Yes, she will still pay SS and Medicare out of her wages just like someone who is not currently collecting.

And yes, any wages earned which have SS/Medicare taxes withheld will eventually be reported to SS and will be incorporated into her monthly benefit. There will be a lag, but it should show up eventually.

Separately, there is a "penalty" of some sort which is applied to the SS benefit - if you work while on SS and make over a certain amount, your SS benefit is curtailed somehow. But my limited understanding is that this curtailment is paid back to you when you stop working. The "certain amount" is relatively low, but this rule may apply to your sister, and she might want to check into it so she isn't surprised. Here's a link that talks about this rule:

Benefits Planner: Retirement | Receiving Benefits While Working | SSA

You can receive Social Security retirement or survivors benefits and work at the same time. However, if you are younger than full retirement age and earn more than certain amounts, your benefits will be reduced.

www.ssa.gov

 

[FREE866]

Thank you SecondCor
This def throws a big wrench in her plan. She intends to work and make ~$70,000 which is much higher than the $23,400 limit .Rule states they deduct $1 in benefits for every $2 you earn above $23,400. Maybe I'm reading this wrong, but this sounds like they would be deducting over $23,000 in benefits. Assuming her total yearly benefit is ~$31000 it doesn't make sense for her to start collecting.

 

[Koolau]

Yeah, I don't see the advantage of taking SS if planning to w*rk (at least other than some pick-up or very part time w*rk) but YMMV.

 

[TheWizard]

Once over FRA, you can make whatever earned income you want without any reduction in SS benefit. So wait until FRA to claim SS...

 

[donheff]

Once over FRA, you can make whatever earned income you want without any reduction in SS benefit. So wait until FRA to claim SS...

+1

 

[Flieger]

Thank you SecondCor
This def throws a big wrench in her plan. She intends to work and make ~$70,000 which is much higher than the $23,400 limit .Rule states they deduct $1 in benefits for every $2 you earn above $23,400. Maybe I'm reading this wrong, but this sounds like they would be deducting over $23,000 in benefits. Assuming her total yearly benefit is ~$31000 it doesn't make sense for her to start collecting.

I believe if she would make $70k, she would not get anything from SS payments?

Flieger

 

[FREE866]

I believe if she would make $70k, she would not get anything from SS payments?

Flieger

the rule states:
we must deduct $1
from your benefits for each $2 you earn
above $23,400.

If she would receive $31,000 in benefits and she earns $46,600 above $23,400 ( $70,000- $23,400) they would deduct $23,300 ( $2 for each dollar above $23,400) they would pay her $7,700 ( $31,000- $23,300).

Thats the way I figure it....does that look right?

Holy crap--could this be any more complicated!?!?!?

 

[Koolau]

Holy crap--could this be any more complicated!?!?!?

Don't tempt them!!

 

[Flieger]

the rule states:
we must deduct $1
from your benefits for each $2 you earn
above $23,400.

If she would receive $31,000 in benefits and she earns $46,600 above $23,400 ( $70,000- $23,400) they would deduct $23,300 ( $2 for each dollar above $23,400) they would pay her $7,700 ( $31,000- $23,300).

Thats the way I figure it....does that look right?

Holy crap--could this be any more complicated!?!?!?

I believe you are right. In our case (DW), that resulted in $0. I stand corrected.

Flieger