Full Time Social Security

[OneMarcilV]

Cab someone work and collect social security even if the amount exceeds Social Security’s maximum earned allowance?

 

[TriumphTR3fan]

Yes if you have reached your full retirement age. If not then there is a penalty. $1.00 withheld of benefit for every $ 2.00 earned above the wage cap. Unearned income doesn’t count. You will eventually receive the withheld money but only after you reach FRA & then it is slowly repaid.

 

[Dtail]

Yes if you have reached your full retirement age. If not then there is a penalty. $1.00 withheld of benefit for every $ 2.00 earned above the wage cap. Unearned income doesn’t count. You will eventually receive the withheld money but only after you reach FRA & then it is slowly repaid.

+1
Many folks I have met didn't understand that the monies withheld get repaid at FRA spread out.
Somehow this concept is not well known, as perhaps it isn't widespread.

 

[donheff]

The only reason I can see for taking it early when you continue to earn enough to differ all of it would be if your health situation was such that you are worried that you will die young and want to try to get as much as possible before you go. Is there any other good reason for filing in this situation?

 

[VanWinkle]

The only reason I can see for taking it early when you continue to earn enough to differ all of it would be if your health situation was such that you are worried that you will die young and want to try to get as much as possible before you go. Is there any other good reason for filing in this situation?

Only if you can't make it without the SS money. Better to reduce expenses than to take SS early if possible.

 

[joeea]

The only reason I can see for taking it early when you continue to earn enough to differ all of it would be if your health situation was such that you are worried that you will die young and want to try to get as much as possible before you go. Is there any other good reason for filing in this situation?

Everyone has their own personal reasons. And we each get to determine what "good reason" means to us.

For me, I see no good reason to file early while working, other than the one you mention.

But I know of some folks who talk about "a bird in the hand". And I know one who believes that Social Security will all be taken away soon and so wants to "get what I can while it's still there". Makes no sense to me, but I guess it does to them.

 

[Sunset]

Yes if you have reached your full retirement age. If not then there is a penalty. $1.00 withheld of benefit for every $ 2.00 earned above the wage cap. Unearned income doesn’t count. You will eventually receive the withheld money but only after you reach FRA & then it is slowly repaid.

Agreed, it is repaid, by a person getting a higher amount of SS payments, just as if they had delayed SS.

So, while it introduces a bunch of complexity, claiming SS at 62 and earning well over the SS limit until age 65 should be the same as simply waiting until age 65.

 

[OneMarcilV]

+1

Many folks I have met didn't understand that the monies withheld get repaid at FRA spread out.

Somehow this concept is not well known, as perhaps it isn't widespread.

See I did not even know this. Glad I asked this here.

 

[OneMarcilV]

Agreed, it is repaid, by a person getting a higher amount of SS payments, just as if they had delayed SS.

So, while it introduces a bunch of complexity, claiming SS at 62 and earning well over the SS limit until age 65 should be the same as simply waiting until age 65.

True but also adding what is made working full time and collecting the Social Security allowance well give me more monies now.

Here is what I figured.

Earn 27,040 Working.
Earn 11,760 Social Security.
This 15,280 is the difference.
Social Security deducts 7,640.
Earn 4,168 from Social Security.
Earn 31,208 total.
Earn 2600 a month.
Earn 600 each week.
Earn 80.00 extra a week.
Earn 320.00 extra a month.
Earn 16,640 a year extra.

So when reaching full retirement age I will receive the held back monies which will be 30,560.

Plus working part time some companies can cut ones hours way under the 29 allowed per week.

I can always ask for part time at a later date to see how this works out.

 

[sheehs1]

Can anyone comment on the "earned income amount"? It's my current understanding that this is a "net of tax" amount not a gross amount. I say this because I started taking SSN this year at 64 and received my notice to confirm my "earned" income for this year and next. It clearly asked for a "net amount".

 

[TriumphTR3fan]

Social Security considers the gross amount for the earnings cap. There are other Social Security experts on this forum that can explain the formula for repaying the withheld money. I do know that it is over many years. It would be possible to die before you are made whole, especially if you have a serious illness. I suggest you read Larry Kotlikoff's book "Maximize My Social Security". If you get a print copy make sure that you get the version that has been updated with the 2015 congressional changes to which he devotes an entire chapter. He appears to be more accurate than many Social Security representatives who are often not well trained. One other thing to remember is that the age penalty remains for the rest of your life. Also spousal benefits & survivor benefits are not restored if they are reduced. You did not indicate if there are others receiving benefits linked to your record. If that is the case it is a serious penalty for earning anything above the wage cap. It is not recalculated. These issues are discussed in Chapter 3 of his book. Chapter 7 explains the complexity of repayment.

shees1 asked, "Can anyone comment on the "earned income amount"? It's my current understanding that this is a "net of tax" amount not a gross amount. I say this because I started taking SSN this year at 64 and received my notice to confirm my "earned" income for this year and next. It clearly asked for a "net amount".
My comment is to not try to get around this. Social Security has many years of administering these benefits & has established procedures for this circumstance.

 

[joeea]

I suggest you read Larry Kotlikoff's book "Maximize My Social Security". If you get a print copy make sure that you get the version that has been updated with the 2015 congressional changes to which he devotes an entire chapter. He appears to be more accurate than many Social Security representatives who are often not well trained.

Agreed. An excellent book from a true expert.

One other thing to remember is that the age penalty remains for the rest of your life.

Age penalty?

 

[sheehs1]

You did not indicate if there are others receiving benefits linked to your record. If that is the case it is a serious penalty for earning anything above the wage cap. It is not recalculated. These issues are discussed in Chapter 3 of his book. Chapter 7 explains the complexity of repayment.
:

No one else is linked to my record. My benefit is more than 50% of ex-husbands so I would never be able to collect on his. Nor would he collect on mine since his is more. All children are in their 30's, working with their own records, etc.

I will have to check it out because even the amount associated with continuing to pay social security taxes (self employment C schedule) on the little bit of earnings that is logged on my yearly social security statement is below the max cap. Everything else I make is considered "investment income" (even my K1 from family business - I am passive, not active". Yes, I checked this out with SS Admin too.

I thought it an interesting question...mainly because of the wording of "net earnings" on the income verification form.
Isn't is amazing how complicated life can get in navigating things as we age?

 

[joeea]

My benefit is more than 50% of ex-husbands so I would never be able to collect on his.

Until it turns into survivor benefits.

Isn't is amazing how complicated life can get in navigating things as we age?

Life is complicated at pretty much any age.

 

[sheehs1]

Until it turns into survivor benefits.

That is not what the Social Security Administration told me...but I will check it out again. Thanks!

 

[kaneohe]

Can anyone comment on the "earned income amount"? It's my current understanding that this is a "net of tax" amount not a gross amount. I say this because I started taking SSN this year at 64 and received my notice to confirm my "earned" income for this year and next. It clearly asked for a "net amount".

would be interesting to see that notice................

 

[joeea]

Until it turns into survivor benefits.

That is not what the Social Security Administration told me...but I will check it out again. Thanks!

In general, the survivor will get the larger of the two benefits.

https://www.ssa.gov/pubs/EN-05-10084.pdf

 

[TriumphTR3fan]

Agreed. An excellent book from a true expert.


Age penalty?

Perhaps I should have said: "the reduction in benefit due to applying for Social Security before Full Retirement Age(FRA)". Age penalty is shorter but less precise.

 

[OneMarcilV]

+1

Many folks I have met didn't understand that the monies withheld get repaid at FRA spread out.

Somehow this concept is not well known, as perhaps it isn't widespread.

Like how much in each payout would this amount to?

 

[sheehs1]

would be interesting to see that notice................

I normally keep a copy of everything! I have been thru both of my Social Security files (one for planning and one is actual) and it's not there. Perhaps I misfiled it. I even signed onto "My Social Security" to see if by chance they have a record or an example of the letter. No luck.

I was able to verify the earnings they post for me seems to be the gross minus what I pay in for social security/self employment taxes. The gross is reported on my taxes as well as the social security tax I pay in, which is on a separate line. So I guess they are picking it up off my taxes.

Perhaps if others have or are starting to get these income verification letters, they can weigh in on the wording of "net earnings" or something to that affect.

 

[OneMarcilV]

I normally keep a copy of everything! I have been thru both of my Social Security files (one for planning and one is actual) and it's not there. Perhaps I misfiled it. I even signed onto "My Social Security" to see if by chance they have a record or an example of the letter. No luck.



I was able to verify the earnings they post for me seems to be the gross minus what I pay in for social security/self employment taxes. The gross is reported on my taxes as well as the social security tax I pay in, which is on a separate line. So I guess they are picking it up off my taxes.



Perhaps if others have or are starting to get these income verification letters, they can weigh in on the wording of "net earnings" or something to that affect.

I keep everything like that. Both a photograph and on paper,

 

[OneMarcilV]

A friend of mine told me that him worked too many hours and what Social Security did on him was issue him his allowed amount every month. Then at the end of the year found out him worked too many hours then him had to pay back the overpaid monies Social Security gave him. The same friend told me that is because Social Security does not know how much monies one makes until one files their taxes.

Does this make any sense?

 

[PartIrish]

True but also adding what is made working full time and collecting the Social Security allowance well give me more monies now.

Here is what I figured.

Earn 27,040 Working.
Earn 11,760 Social Security.
This 15,280 is the difference.
Social Security deducts 7,640.
Earn 4,168 from Social Security.
Earn 31,208 total.
Earn 2600 a month.
Earn 600 each week.
Earn 80.00 extra a week.
Earn 320.00 extra a month.
Earn 16,640 a year extra.

So when reaching full retirement age I will receive the held back monies which will be 30,560.

Plus working part time some companies can cut ones hours way under the 29 allowed per week.

I can always ask for part time at a later date to see how this works out.

Your equation is a little off. If you collect Social Security before full retirement age, the 2019 earnings limit is $17,640. So in your example above, that means that your earned income ($27,040) minus the earnings limit ($17,640) = $9400. The $9400 is the amount subject to earnings penalty by Social Security. SS will take back $1 for every $2 of that $9400 out of your social security check.

 

[OneMarcilV]

Your equation is a little off. If you collect Social Security before full retirement age, the 2019 earnings limit is $17,640. So in your example above, that means that your earned income ($27,040) minus the earnings limit ($17,640) = $9400. The $9400 is the amount subject to earnings penalty by Social Security. SS will take back $1 for every $2 of that $9400 out of your social security check.

Much appreciate the reply. I would rather have the overage monies taken out now rather than having to pay monies back like my friend said him had to.

 

[RunningBum]

A friend of mine told me that him worked too many hours and what Social Security did on him was issue him his allowed amount every month. Then at the end of the year found out him worked too many hours then him had to pay back the overpaid monies Social Security gave him. The same friend told me that is because Social Security does not know how much monies one makes until one files their taxes.

Does this make any sense?

I have no experience with this, but it makes sense to me.

What happens if you have them reduce your benefit now because you are working, but part way through the year you stop working for some reason, and stayed under the limit? It would seem complicated to get the benefits back.

Just estimate how much the overage is each month or paycheck, and set that aside in a separate money market account, and at the end of the year use that to pay taxes. Or have the extra withheld from your paycheck. Most places will allow an extra amount of taxes to be withheld.