Even if you are receiving Social Security benefits, you can still have a job and earn an income. But this is not as simple as you may think; there is a limit on your monthly payment to continue to qualify for S.S. benefits.
In 2022 Social Security payments have a growth of 5.9%, so you must be careful not to fail to comply with any regulations to continue with the collection. Having a monthly income is a plus for your retirement earnings, but you must be careful not to exceed the limit.
Earnings limit rule for Social Security benefits
Many retirees have earned more than the statutory limit on annual earnings from non-retirement work when applying for benefits mid-year.
The rule states that Social Security may pay you a full check for the month they consider you retired, but not your annual earnings. Two situations must apply:
- You are under the appropriate age for retirement during the current year. You will be considered retired in the month of 2022 if your earnings are equal to or less than $1,630 and you have no other source of income.
- In 2022, you will be considered retired when your earnings are equal to or less than $4,330. Without having any substantial service at work on your account.
When substantial service in self-employment is raised, the law indicates any dedication for more than 45 hours per month to work or having between 15 and 45 hours of work in a highly-skilled occupation.
Let’s assume Sam Miller retired from employment at age 63 on June 30, 2022. To date, he has a total income of $37,000. On October 1, he started his own business, where he has at least 15 hours a week.
For the rest of the year, he works the same number of hours and has an income of an additional $3,000; at the end of 2022, he will have $40,000 in earnings. The limit for 2022 is $19,560. He will be exceeding it.
Sam will have his Social Security payment for July, August, and September because he did not have a job. He will not receive benefits for October, November, and December because he worked more than 45 hours each month in his business.
How much can you earn to continue receiving the benefit in 2022?
The Social Security benefit reduction will be $1 for every $2 you earn above the annual limit; remember that in 2022 the limit is $19,560. The rule applies if you are not yet old enough to qualify.
When you reach the appropriate age for retirement, the deduction will be $1 for every $3 you earn above the limit. In 2022 it stands at $51,960. The earnings calculation is made up to the month before the month in which you reach retirement age.
How is the benefit deduction made?
If you are not yet at full retirement age, you can earn $800 per month and $9,600 per year in benefits. If you have been working and had an income of $29,560, you are over the limit by $10,000.
Therefore, you will have a total benefit of $5,000, deducting $1 for every $2 exceeded; you will receive $4600 of the corresponding $9600. The math is simple, $9600 – $5000 equals $4,600.
If you have reached the minimum age, the deduction is made in the same way, but deducting $1 for every $3 you earn over the limit. Similarly, starting in August 2022, you will begin to gain your full benefit no matter how much you make in your job if you are of retirement age.
Waiting to reach your full Social Security retirement age
When you are old enough to begin collecting your retirement benefit, you no longer have to worry about the number of hours worked and whether there will be a deduction in your help for the month. The full age depends on your year of birth.
If you were born between 1943 and 1954, you must be 66 to retire; if you were born in 1960 or any year after that, you must be 67 to take full advantage of Social Security benefits. You can stop worrying about earning more than the established limit when you reach the appropriate age.
Similarly, in 2022, the penalties for earning more than the stated amount before the appropriate age are less. However, the recommendation is to wait to reach the required years to avoid deductions.