Work income can impact your Social Security retirement or disability, something many people do not realize. There are many different rules related to Social Security benefits, and below we touch on how work income impacts benefits and the maximum amount of the benefits a person can earn no matter how much they made when they were working. These are rules that everyone should be aware of so there are no surprises if benefits are reduced or if they are surprised about what their benefit amount is.
Rule No. 6: Working while receiving Social Security benefits may reduce your benefit checks
If you earn more than $17,040 per year (in 2018) while also receiving Social Security benefits and are under full retirement age, your benefits will be reduced by $1 for every $2 that you earn above this base amount. Once you’re above full retirement age, your earnings will no longer limit your benefits. What’s more, the Social Security Administration will credit you for the benefits you didn’t receive in previous years due to earning extra money, and will add that amount to your future benefits.
Rule No. 7: Social Security benefits are capped
For 2018, if you claim your Social Security benefits at full retirement age, the most you can get is $2,788 per month. You’ll get the maximum if your Average Indexed Monthly Earnings during your 35 highest income years was at least $9,936 (indexed means that your earnings are weighted to account for inflation). If you wait until age 70 to claim your Social Security benefits, then the most you can get in 2018 is $3,680 a month. The average Social Security benefit for 2017 is $1,404 per month.
The income limit and capped amounts do change from year-to-year depending on benefit amounts, because benefit amount tend to also change.
