Social Security Work Requirement Changes for 2019 -

Social Security Work Requirement Changes for 2019

One of the most common questions asked is whether or not you can work and collect Social Security. The simple answer is yes, you can! But there are some things you need to know.

If you have reached your Full Retirement Age, you can work and earn as much as you choose without penalty and still collect your full monthly Social Security benefit. This is true for any age after FRA. Find your Full Retirement Age Here:

If you are under your FRA, however, there is a penalty for anything you earn over $17,640 (2019) per year. This is called the earnings test

If you work and are under your FRA, there is a $1 penalty for every $2 you earn over $17,640.

For instance, if you are 62, collecting Social Security payments and earn $31,640 in a year, you will have earned $14,000 over the limit. Your penalty would be $7,000 and you would also have an additional $7,000 in your pocket.

Whether or not you will work may be the most influential factor when deciding when to begin collecting Social Security.

If you are going to work, you must consider how much you will earn and decide whether it is best for you to wait until your earnings decrease to begin collecting.

Remember too, that you have 12 months to withdraw your application. If your circumstances change, and you are earning more than anticipated, you can withdraw your application, return any Social Security benefits you have been paid, and avoid the penalty. You can then reapply at a later date that is more financially suitable for you.

What Constitutes Income?

For the earnings test, Social Security includes only your wages or net earnings, including bonuses, commissions, and vacation pay. Retirement plan income, investment earnings, and interest are not included.

Penalties Assessed After the Fact It’s important to note that the penalty is not assessed at the time you earn it, but after you file your tax return. Unless you pay it upfront, it is deducted from your monthly Social Security payment. Your payment will be withheld until the penalty is satisfied. If you owe $7,000 and your monthly payment is $1,400, you may not receive a Social Security check for five months at some time in the future. The penalty may not be taken out immediately, but rest assured it will be taken out eventually. Don’t get caught by surprise. Calculate for this in your budget.

Benefits Suspended for Others on Your Account Also, if your payment is withheld because of work, anyone else receiving benefits on your work record—your spouse and minor child—will have their payments suspended as well. But the work of others collecting on your account does not affect anyone else’s benefit, including your own.

If you plan on working full time and making more than $17,640, you may want to wait until your Full Retirement Age to apply for Social Security benefits. Most or all of your payment could go to pay the penalties.

In the year of your Full Retirement Age, the penalty and maximum you can earn changes. The amount you can earn before you are penal ized is $46,920 in 2019. If you made more than that, the penalty is decreased to $1 for every $3 you earned.

After your FRA, there is no limit and there is no penalty.

The earning limits are calculated on a full calendar year, January to December, not from when you start collecting. Be careful here. This may cost you.

If you have been penalized for earning over the allowed limit, once you reach FRA, your benefit will be recalculated with those months included and will result in an increase in your monthly payment. It may take 10 to 15 years to make up the amount lost due to the penalties.

If you have earned more in any recent year than in one of your previous 35 years, Social Security will recalculate your benefit automatically. It will replace a past lower earning year with a current higher earning year, thereby increasing your monthly payment.

Once you reach your FRA, there is no limit to the amount you can earn. There is no longer a penalty at any time in the future.



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