How much can someone earn while collecting social security?
When it comes to retirement, one of the most common questions people have is how much they can earn while collecting social security. Social security is a crucial source of income for millions of Americans, providing a safety net during their golden years. However, the answer to this question can vary widely depending on several factors, including the individual’s age, earnings history, and the specific rules and regulations set by the Social Security Administration (SSA).
Understanding the Basics
The Social Security program was established in 1935 to provide financial support to retired workers, disabled individuals, and surviving family members. To qualify for social security benefits, individuals must have worked and paid into the system for a certain number of years. The amount of benefits one receives is based on their average earnings during their working years.
Earnings Limitations
When it comes to earning while collecting social security, the SSA has set certain limitations. For individuals who have reached full retirement age (FRA), there is no earnings limit. This means they can earn as much as they want without affecting their social security benefits.
However, for those who are under FRA, the SSA imposes an earnings limit. In 2023, the limit is $19,560 for individuals who have reached their FRA but have not yet reached their birthday for the month in which they turn FRA. For every $2 earned above this limit, $1 in benefits will be withheld. It’s important to note that this earnings limit is adjusted annually to account for inflation.
Impact on Benefits
It’s crucial to understand that the earnings limit only applies to those who are under FRA. Once individuals reach FRA, they can earn as much as they want without any reduction in their social security benefits. However, if they choose to work and earn above a certain threshold, their benefits may be taxed.
Benefits Taxation
For individuals who earn above a certain amount, their social security benefits may be subject to taxation. In 2023, single filers with a combined income of $25,000 or married couples filing jointly with a combined income of $32,000 may have up to 50% of their benefits taxed. If their combined income exceeds $34,000 for single filers or $44,000 for married couples filing jointly, up to 85% of their benefits may be taxed.
Conclusion
In conclusion, the amount someone can earn while collecting social security depends on several factors, including their age, earnings history, and the specific rules set by the SSA. Understanding these limitations and the potential impact on benefits is crucial for making informed decisions about retirement planning. While there are no earnings limits for those who have reached full retirement age, individuals under FRA must be mindful of the earnings limit and its potential impact on their benefits. By staying informed and planning accordingly, retirees can ensure a comfortable and secure retirement.
