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If you take Social Security benefits before your full retirement age, and you earn income in excess of the annual earnings limit, your Social Security benefit will be reduced until you reach full retirement age.
Investment income does not count toward the annual earnings limit; the only income that counts is earned income — the income you earn by working, either for someone, or as a self-employed person.
Determine your "Normal Retirement Age" with Social Security ...click here for SSA site.
How Much Can I Earn?
In 2019, the annual earnings limit for those under full retirement age (FRA) is $17,640. That means in 2019 you can earn up to $17,640 and receive all your Social Security benefits even if you aren't yet at full retirement age. This is an increase from the 2017 limit of $16,920 and the 2018 limit of $17,040.
If you earn over the limit, there are a set of rules that determine how much your Social Security benefits will be reduced. There are three different earnings limit rules that apply, depending on whether you earn the income before, during, or after the year your reach full retirement age.
Each option is covered below:
1. Income Earned Before the Year You Reach Full Retirement Age
If you are collecting Social Security benefits, and earn more than the annual earnings limit, Social Security will take back $1 of Social Security for every $2 over the limit
... a serious reduction.
This reduction applies to any year before you reach full retirement age, and it applies to income earned the entire year, even if you were not eligible for Social Security the entire year. So if you work a partial year, the income you earn before the month you start collecting Social Security benefits still counts toward the annual earnings limit.So if you work a partial year, the income you earn before the month you start collecting Social Security benefits does not count toward the annual earnings limit.
2. Income Earned During the Year You Reach FRA
During the year you reach FRA, and up to the month you reach FRA, Social Security will deduct $1 for every $3 you earn that is over the annual earnings limit, but a different earnings limit applies the year you reach FRA.
In 2019, the earnings limit is $46,920 during the year you reach FRA. This is a significant increase from 2018, when you earn up to $45,360 – itself a $480 increase from 2017. During this year, Social Security only counts earnings that you receive before the month you reach FRA.
Example 1: Let's assume you were born in 1952, which means your FRA is age 66. You turn 66 in June 2019 and begin your Social Security benefits at that time, but you continue to work until the end of the year, and earn $44,000 for the year. Your benefits will not be reduced because you earned less than the $46,920 for the year.
The Social Security website provides additional examples of how this deduction works. You can also use the earnings test calculator, and plug in your date of birth and expected earnings to see if you think a reduction will apply to you.