About Social Security Income Limits
It is important to understand Social Security income limits so that you do not experience an unexpected reduction in receiving benefits. Keep in mind that income limits are typically only triggered for individuals who have not reached the retirement age.
Social Security income limits apply to individuals who have not reached the retirement age. For individuals at the retirement age, or older, there is no income limit. This means, if you are retired, you are free to earn as much as you would like, while not having to worry about triggering a reduction in benefits.
- Consider your birth year. For individuals who were born between the year 1943 and 1955, the retirement age to begin receiving Social Security benefits is 66. The retirement age increases to 67 for individuals born in 1960 or later. Keep in mind, due to the current spending frenzy in Washington D.C., the retirement age may continue to increase.
- Consider the IRS income triggers. As of 2009, for individuals who have not reached retirement age, benefits reductions will begin if they earn more than $14,160. For every $2 earned beyond that income limit, Social Security benefits will be in turn reduced by $1.
- Consider the income type. For example, wages count towards the earnings limits, but if you are self-employed, only net earnings count. Capital gains, interest, dividends and pensions do not count towards triggering benefit reductions for Social Security.
- Consider the time period of the reduction in benefits. Keep in mind that these reductions are temporary, and full benefits will be restored when an individual reaches the retirement age.