Q: I took early retirement at age 62, but continue to work. My $30,000 income reduces my benefits. I understand from your story in the March Advisor there is a special rule that allows me to earn $30,000 the year in which I reach 65. My birthday is November 28, 1938 and I turn 65 next year. How much may I earn?—J.L.
A: Beneficiaries age 64 and under who earn more than a certain amount could have their benefits reduced $1 for every $2 over the limit. In 2002 beneficiaries under full retirement age could earn $11,280 ($940 per month) without any loss of benefits. In 2003 that amount rises to $11,520 ($960 per month). After you turn full retirement age you may earn as much as you want without reduction.
A different rule applies to the year in which you reach full retirement age which up until recently has been age 65. In 2002, persons who turned age 65 could earn $30,000 or ($2,500 per month) without loss of benefits. Over that amount a person’s benefits are reduced $1 for every $3.
Your eligibility to earn more rests on whether you have reached your legal full retirement age. Full retirement age has been gradually rising from age 65 as mandated by 1983 law changes. (See chart below.) Even though you turn age 65 in November of 2003, you will not be able to take advantage of the special rule until 2004 because full retirement age for you is 65 and two months, or January 28, 2004.
The hitch: the special rule applies only to the months of the calendar year in which you turn full retirement age. That in your case is January 2004. To avoid reductions of your benefits you should keep your earned income at or below $11,520 in 2003. You will not be able to take advantage of the special rule. On the other hand a person who was born one month before you, say on October 28, 1938 would be allowed to earn up to $30,720 ($2,560 per month) in 2003, because their full retirement age of 65 and 2 months would be December 28, 2003.
Year in which you reach 62 | Retirement Age |
Years through 1999 | 65 |
2000 | 65 + 2 months |
2001 | 65 + 4 months |
2002 | 65 + 6 months |
2003 | 65 + 8 months |
2004 | 65 + 10 months |
2005–2016 | 66 |
This rule unfairly disadvantages persons born in November and December of 1938. In 2003 the year prior to your full retirement age, you are only allowed to earn $11,520 instead of $30,720. In addition, if you go over that amount, MORE benefits are withheld, $1 for every $2 over the limit instead of $1 for every $3. Unless modified by corrective legislation, this technicality will unfairly penalize increasing numbers of seniors for working.
To confirm what you are allowed to earn check with your local Social Security office or call Social Security toll free at 1-800-325-0778.
Editor’s note: This is a new problem created by the increase in the full retirement age. If you are affected by the above situation, contact your Members of Congress. Ask for “constituent services” and tell them how this unfair rule penalizes you. Ask your lawmakers to cosponsor legislation that would abolish the Social Security earnings limitation.—Mary Johnson
December 2002
|
Legal Statement |
Contact Us
Copyright © 2007 The Senior Citizens League | 703-548-5568
| 909 N. Washington St. #300, Alexandria, VA 22314
All Rights Reserved
|
