Receiving Social Security and Still Working

(3/31/15)- Next year the value of estates subject to the federal estate tax will have to exceed $5.43 million, or nearly $11 million for a couple. Senate Republicans voted in the majority, 54 to 46, to fully repeal the federal estate tax law, but it is highly unlikely that this will happen when the ultimate budget is passed.

The budget bills passed separately by the House and the Senate skirted the limit on military spending by moving to put about $40 billion into a war-fighting account that does not count against the spending cap for the military

(1/27/15)- The maximum amount of earnings which you can be taxed for in 2015 is $118,500, up from $117,000 in 2013. Your retirement benefit is based on your earnings in your 35 highest paid years, after the early years’ pay has been adjusted upward based on average wage growth over the decade.

The increase in benefits each year that you delay your full retirement age past your eligible retirement age until 70 is 8% of the benefit at full retirement age. That means it will go up by the same dollar amount once you get past 70 if you defer receiving your benefit check until then.

(12/24/13)-“The earnings limit for workers who are younger than “full” retirement age will be $15,480 (in 2014). The earnings limit for people turning 66 will be $41,400. Your benefits will be reduced if you earn more than these limits.”(Social Security Administration).

(11/3/13)- The Treasury Department announced a new rule that would permit employers to allow eligible employees who have flexible spending accounts (FSA) to roll over up to $500 into the following year. Employers are not required to do so.

Until this ruling, any unspent money in an employee’s FSA account was lost if not used. The maximum allowed into an FSA account was reduced to $2,500 in 2013. Under some employer’s plan, an employee gives workers up to 2 ½ months into the following year to be included in their reimbursable medical expenses.

Under the Treasury ruling, the 2 ½ month extension cannot be utilized if the employer opts to allow the $500 rollover

(9/9/13)- An average of 35.9% of men 65 to 69 years of age had jobs this summer, as did 25.6% of women in that age category, according to data released by the Bureau of Labor Statistics. These were the highest figures for both sexes since these numbers became available in 1981. The employment rate for women 70 to 74 was also higher than in any previous summer.

Most experts believe that people are working at older ages than ever before as a result of the recession and stock market drop of 2008-2009.Younger people lost jobs and many 401(k)s lost quite a bit of their value causing workers to delay retirement.

The share of men 60 to 64 with jobs was 57.2%; for women in that age category, it was 47.1%

(7/31/12)- There are several online tools that are geared towards helping you make the decision as to when to start taking your Social Security check. Here is a list of a few of them that are either low-cost or free to use:

(7/20/12)- Most individuals covered by an employer's health plan opt out of Part B, since the premium runs about $1,199 for most people, but can be much higher if your adjusted gross income runs into the high brackets.

When you stop working, you can sign up for Part B during a special enrollment period that lasts eight months following your final day of employment.

The clock for the eight months period of time to be eligible to enroll starts running when you leave the job

(7/9/12)- One of the tougher choices to decide upon as you get older is; "should I wait to get my social security check until I reach 'full retirement age' or should I start taking it as soon as I am eligible to receive it, even at a reduced level?".

Obviously if you knew when you were going to die, the choice would be made easy. You must also take into consideration when making this decision how badly you need the income presently and also how healthy you are now.

After taking everything into consideration, please remember that for every year you wait, up to the age of 70, you will receive an increase of 8% for each year that you wait.

In the past you could take your lower payment and then receive the "full age benefit" by repaying the lesser amount and then opting for the full benefit. The law was changed, so that this option is no longer available.

As a widow, you can start with either your survivor benefit or your earned retirement benefit and then switch to the other benefit at a time you choose. Also as a widow, you can start one benefit before your full retirement age, which reduces the amount you receive from that benefit, and then switch to the other benefit at full retirement age without any reduction.

(6/29/12)- More than 3.5 million Americans between the ages of 45 and 64 were unemployed as of May 2012, 39% of them for a year or more. This is the highest long -term unemployment rate for this age bracket in history, according to Department of Labor statistics.

In the 1990s, the unemployment rate among the 45 to 64-year olds peaked at 5.7%, while in the downturn in the 1980s the jobless rate for that age bracket peaked at 7%. In the present recession, the rate peaked at 8.2%.

(6/20/12)-The Social Security benefit check is calculated based on your 35-year average earnings starting with your highest earnings and working its way down through the next highest earnings for the 35 years total period of time. If you have worked for less than 35-years, the non-working years penalize you, since you would have zero income included for the zero years of earnings.

Earnings from years ago will get adjusted for the rise in inflation over time. Inflation adjusted earnings may mean some of your earlier lower wages might have a beneficial impact on your ultimate benefit computation.  

(5/20/12)- The latest figures from the Bureau of Labor Statistics show that the percentage of workers over 65 is at a record high. The Bureau began publishing these statistics in 1981 and this report covered the period ended April 30, 2012.

One in nine male Americans over 75 and one in twenty women over 75 years of age were still working. In the 70 to 74-age category, one in every 5 males and one in every 12 were still working. For the 65-69-age category the numbers were about one in every three males and one in every 5 females were still employed.

(4/16/12)- As one gets closer and closer to becoming eligible to receive a social security age related check, the question arises as to when it is best to start receiving that check. Should I wait until "full retirement age", "full retirement age" plus, or take it at an earlier age, even though that would mean receiving a lower amount?

There are several sources available to help you make this decision. There are some planners who specialize in helping you with this matter and this matter only, as opposed to some planners who help you with your overall financial planning.

You can find advisers who specialize in Social Security analysis at

There are some sophisticated online tools that let people crunch their own numbers such as which was developed by Laurence Kotlikoff, an economic professor at Boston University, and software engineer Richard Morrow. Some other choices for you to look at are: and

You can get an estimate of your benefits at your full retirement age by using the Social Security Administration's site

(4/2/12)- An interesting situation arises if you begin to take your benefit early, and then decide to return to the workplace, what happens to the amount that you will then be receiving? When you took your benefit earlier than your normal retirement age your benefit is reduced, but this does not have to be a permanent reduction.

In the situation where you return to work after taking early benefit, your benefit will be recalculated when you reach full retirement age, and any month your benefit was reduced by even $1 is removed from the early retirement reduction calculation.

As an example, if you began to receive your Social Security benefit at the age of 62, and your full retirement benefit age would be 66, a recalculation would be made when you attain the age of 66. If you had your benefit reduced because of the earnings test for 18 months, your new benefit would be recalculated as though you had begun taking it 30 months early, not 48 months.

Please keep in mind, especially in this era of low interest rates, if you wait to receive your first benefit check until you are 70, you will receive an 8% increase per year for waiting until you reach the older age.

The law used to be that you could repay, in full, all early benefit payments you receive when you reach full retirement age and then be entitled to full retirement benefit. That law is no longer true, but if you have been receiving the benefit check for less than one year, you are allowed to withdraw your application, repay all the benefits and reapply at a later date. You are allowed to do this only once in your lifetime.

For more information on older working Americans, please see our article "Older Americans 2011: Indicators of Well Being"

(12/13/11)- If you go into the Social Security Web site you will see under the question "How Much Can I Earn while Receiving Social Security Retirement Benefits?" the following answer with some additional info inserted by the editors:

A beneficiary under the full retirement age can earn $14,160 a year and not lose any benefits in 2011. We will deduct $1 in benefits for every $2 earned above $14,160. This amount was increased to $14,640 in 2012.

A beneficiary reaching full retirement age in 2011 can earn $37,680 a year and not lose any benefits in 2011. We will deduct $1 for every $3 earned above $37,680 until the month you reach full retirement age. This amount will be increased to $38,800 in 2012

The same earnings limits apply to a child or spouse who works and receives benefits on your record.

Once you reach "full" retirement age or older you may keep all of your benefits no matter how much you earn.

(10/25/11)- The U.S. Social Security Administration announced that retirement benefits for about 55 million beneficiaries would go up by 3.6% effective January 2. 2012. This will be the first cost-of-living increase since 2009 and it will mean that the average Social Security check will rise by an average of $516 a year to $14,748. The average monthly check will increase by $43, to $1,220.

This will also mean that the maximum amount of annual wages subject to Social Security taxes will rise to $110,100 from $106,800.

An additional 8 million poor and disable people receiving supplemental benefits will see a 3.6% increase starting this December 30th.

The annual benefit adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. Some economists are suggesting that the index be changed to the "chained CPI", that reflects a lower rate of inflation based on the assumption that consumers switch to lower priced items when faced with price increases.

Social Security beneficiaries' last increase in 2009 was 5.8%. The agency will pay about $727 billion in benefits this year to retirees, people with disabilities and surviving spouses and children.

To see what these limits are if you are still working and receiving a Social Security check, please go to our item dated 8/20/08 below.

(3/30/11)- There has been a change made in the Social Security regulations, so that it is no longer possible to pay the lump sum difference between what you received in selecting an early retirement payments when you are 62 and what you would receive if you had waited for full retirement age. In affect people could use this option without having to pay any interest on the payments received, as long as you could make the lump sum repayment in full.

If you claim Social Security before the year you reach full retirement age your benefit will be reduced by $1 for every $2 you earn over a threshold, which is $14,160 in 2011.

(12/15/08)- If you were "full" retirement age (age 66 in 2008) you may keep all of your benefits no matter how much you earn. But, if you were younger than full retirement age at any time during the year, there is a limit to how much you can earn before your benefits are reduced.

To see what these limits are please go to our item dated 8/20/08 below.

Your state may help pay for Medicare expenses through the Medicare Savings Program if:

(8/25/08)- (Editor's note: Please see our item dated 3/30/11 since this is no longer in force)-Another one of the frequently asked questions to the Social Security Administration is if you can return your payments that you received from your early retirement amount, if you make application to receive "full retirement age" payment without having to pay a penalty for doing so?

According to Social Security officials you can do it, and it is entirely legally to do it. You must file Social Security Form 521, "Request for Withdrawal of Application". You can go onto the site and download this form.

When you return your past benefits, you won't owe any interest, and there is no adjustment for inflation. You also may be able to recover federal income taxes you paid on those benefits. Internal Revenue Service Publication 915 has instructions and worksheets on this matter.

It is our understanding that the repayment must be done in one lump sum, but check with your local Social Security office on this question.

(8/20/08)- The most frequently asked question of the Social Security Administration (over 600,000 times in 2007) was "How much can I earn and still receive my Social Security benefits?"

If you are under your "full retirement age" when you first receive Social Security payments, and if you have earned income, $1 in benefits will be deducted for each $2 you earn above the annual limit. In 2008, the limit is $13,560.

In the year you reach your "full retirement age", $1 in benefits is deducted for reach $3 you earn above a higher limit, which is $36,120 in 2008. Then, starting with the month you reach your full retirement age, the deduction ends.

Probably the toughest question to answer is the one: "Should I start taking my reduced benefits at 62 or wait to get the higher amount when you reach your full retirement age?" Please keep in mind that you can wait to receive your first check until you are past your "full retirement age", and be rewarded with a higher payment for each year that you wait.

The Social Security Web site has calculators to help you arrive at an informed decision in this matter. Click on "Calculate your benefits" on the home page to get to the calculators. There are several different calculators on the site which deal with different questions on this issue.

(1/10/08)- The maximum amount of earning subject to the Social Security tax rose to $102,000 for 2008 from $97,500 in 2007. Of the estimated 164 million workers who will pay Social Security taxes in 2008, nearly 12 million will pay more because of this increase, according to the Social Security Administration.

The Social Security tax rate remains at 6.2%, so that the maximum that can be withheld for Social Security from your paycheck is $6,324. The Medicare wage base remains "unlimited" earnings at a tax rate of 1.45%.

The maximum amount that an individual can put into his/her regular IRA or Roth IRA has been increased to $5,000 in 2007 from $4,000 in 2007. Those who are 50 years or older in 2008 can put away a "catch up" additional amount of $1,000 for a total of $6,000 in 2008, when the "catch up" amount was only $500 in 2007.

The 401(k) limits stay the same in 2008 as they were in 2007, namely $15,500 for those under 50 years of age, and up to $20,500 for those who are over 50.

(5/17/00)- On April 7th, 2000 President Bill Clinton signed into law a measure that eliminated the amount of income someone in the age category of 65-69 could earn without having his or her Social Security benefits reduced. Under the prior law beneficiaries had their Social Security benefits reduced by $1 for every $3 they earned over $17,000. The new law is retroactive to January 1, 2000 and will affect some 800,000 people in this age category. The new law does not change the rules governing individuals who take early retirement at age 62. Those individuals lose $1 for every $2 earned over $10,800 a year.

Once over 70 the earnings restrictions do not apply even under the old law. Please keep in mind however that you can increase the amount of your benefit if you delay taking the Social Security payments until you reach an older age. To determine your delayed retirement credits you may use the following computations:

Year of birth -----------------------------Annual percentage rate






5 %



If you are interested in earning the special credits instead of receiving current benefits you must call the Social Security toll free number at 1-800-772-1213, and notify them that you do not wish to receive your check.

I received a letter on Monday April 10, 2000 advising me of the change in the law. I certainly was impressed at receiving this notification so soon after the law had been passed. I did not want to receive my check so I decided that I would notify the Social Security system of my decision. I work in the mid-town area and I had never been to my local office which I was advised in the letter was located at 757 2nd Avenue in Manhattan. I had registered for Medicare by mail so I had never even visited my local office. When I went to the office I saw that it was clean and not overly crowded. I was advised by a polite security guard who I showed the letter to that I had to go over to line #2. There were about 10 people already waiting on line #2. The people on the line did not have to stand, but rather were seated in comfortable enough chairs. I asked the guard approximately how long would I have to wait and he politely told me that he guessed about 1/2 hour. I decided that it would be more efficient for me to call the 800 number.

When I called the 800 number it was automatically answered on the 3rd ring. I was given 6 different options to choose from, but since none of the items were pertinent to my problem I dialed 0 and waited for an individual to talk to about my problem. I only had to wait about 2 minutes before a Ms. Parker got on the line. She listened politely to what I said, and then she replied that since the change was so new she would have to make an inquiry as to what the process was in my situation. She asked me if I had time to hold on while she made the inquiry and I said I did have time. It did take her about 12 minutes to get back to me, and she did apologize for the long delay. Since the computer was not programmed for my situation she told me that she would notify the computer center in Jamaica not to make my payments. If however I did get a payment in May, that all I need do was return it along with a note that the payment was made in error. I felt that she had been quite polite with me and since I realize how new this situation is, it still had to be worked out. In general I felt that the system had worked well under the circumstances.

In updating the above paragraph, when I received my May bank statement I noticed that I had been credited with the Social Security payment that I had requested not to be paid to me. On May 17, 2000 I called the Social Security number 1-800-772-1213, and reported to a Ms. Stackowitz that I had received the payment that I had requested not to have been paid. She was very polite and cooperative as she listened to my story. She told me that there were two possibilities for me to follow in this situation. Under the first possibility I could return the overpayment by personal check to the North Eastern Program Service Center at 1 Jamaica Center Plaza, 155-10 Jamaica Ave. Jamaica, N.Y. 11432-3830, along with a note explaining what had happened. Under the other possibility I could wait for the Notice of Overpayment, and return the money with that Notice. In checking the records Ms. Stackowitz indicated that the Notice was sent to me on May 5, 2000. Since I had not received any Notice from the Social Security Administration I put a check in the mail to them on May 17, 2000. I will keep you informed as to the results of returning the overpayment.

The wage base maximum upon which the 6.2% Social Security tax is based will increase in the year 2000 to $76,200 from $72,600 in 1999 and $68,400 in 1998. Thus you could be taxed on an additional 5% of your earned income in 2000 over the earned income maximum level for 1999. This means that you may pay up to $4,724 in Social Security taxes in 2000.

On the positive side, beginning in January 2000 retirees will receive a 2.4% increase in their benefits checks over the 1999 level. Please keep in mind that effective January 2000 Congressmen and the President will be receiving a 3.4% raise. The 1999 increase over the 1998 level was 1.3%. There are over 44 million people receiving Social Security benefits as of September1999. The average monthly check will rise to $804 from $785 in 1999.We would like to point out however that the 2.4% figure trails the true expenses for the elderly. The cost of medical care is rising at a 3.7% rate, and prescription drug prices are rising at a 6.2% rate. These inflation numbers are much more relevant to the costs incurred by the elderly.

Beginning January 1, 2003 changes will take place that will effect "Full Retirement Age". Those born before 1938 will continue to have a Social Security "Full Retirement Age" of 65. For those born after 1938, the Full Retirement Age will rise in monthly segments. To compute what your Full Retirement Age is add 2 months on to the age 65 for each year past 1937 that you were born. Thus for those born in 1938 the Full Retirement Age becomes 65 years and 2 months. If born in 1940 it becomes 65 years and 6 months. For all those born in 1960 and later your Full Retirement Age will become 67 years old.

Full Social Security benefits are paid to beneficiaries who retire at age 65 but payouts are reduced for those who start collecting at an earlier age. You can apply for your retirement check at age 62, but it will be 80% of the amount you'd receive if you waited until 65; at age 63 it is reduced by about 13 1/3 percent; and at age 64 it is reduced by about 6 2/3 percent. Beginning in the year 2000, the early retirement benefit for a 62-year old will be decreased an additional 1 % per year. Starting in 2003, if your full retirement age is 67 and you retire at 62 your benefits will be reduced by about 30 %. At age 63 it will be reduced by about 25%. At age 64 it will be reduced by about 20%. At age 65 it will be reduced by about 13 1/3% and at age 66 it will be reduced by about 6 2/3 %.

Some people chose to delay their retirement past their Full Retirement Age. In that case you can increase your Social Security benefits in 2 ways. Each additional year you work, up to 70 years of age, adds additional earnings and credits to your Social Security earnings record. In addition, your benefits will be increased by a certain percentage if you delay retirement. For those born in1929-1930 the yearly increase is 3 %. For every 2 years thereafter the percentage increase is .05%. Thus if you were born in 1937-1938 the yearly rate of increase is 6.5%; if born in 1943 or thereafter it is an 8% yearly increase. Even if you decide to delay your retirement be sure to sign up for Medicare 3 months before you become 65.

When you work and pay Social Security taxes (called FICA on some pay stubs), you earn Social Security credits. Most people earn the maximum of four credits per year. If you were born after 1929 you need 40 credits to be able to get retirement benefits. Your credit record allows for interruptions if you stop working. Once you resume working your credit record will add any new credits to the old ones you previously earned.

Generally, out of every dollar you pay in Social Security taxes:

The administrative costs are paid from the trust funds described above and are about one cent for every Social Security dollar collected.

The amount that you earned, and the number of credits that you have amassed will also determine the amount of the Social Security check that you receive. Social Security will give you a personalized benefit estimate at your request. To obtain a print out of this estimate call 1-800-772-1213. Ask for form -7004 (Request for Earnings and Benefit Estimate Statement). It takes about 4-6 weeks before you get back the requested information. The Social Security's web site is located at Unfortunately we can not link you to this site, so if interested, use this URL to go to the site on your own.


By Allan Rubin
updated March 31, 2015

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