Q. I retired in February and received my first Social Security check, $1,102.00, on the second Wednesday of the month for 9 months. I will earn around $10,000 this year. I am receiving around $18,000 a year from my two pensions checks. I am confused with the 50% of every dollar I make after the limit? What dollar amount would that be. If I must return 50% back to Social Security over the limit; will I ever get this 50% back at full retirement age? I have been offered a position making around $18,000 a year, but if I have to give back $4000 to Social Security it would mean I am only making $7.00 a hour? Could I stop my Social Security payments for a quarter of the year? I would greatly appreciate your answers and advice on my situation and what would the smartest approach would be to this situation?
A. Only earnings from employment or self-employment count against the annual Social Security earnings limitation. Pension benefits are not earnings and therefore do not count.
In 2013 the earnings limitation for persons less than full retirement age is $14,160. For every $2 in earnings over the limit, the Social Security Administration must withhold $1 in benefits. If you do not earn over the annual limit, you are entitled to a benefit for every month. If you increase your earnings for the balance of this year, the Social Security Administration will recover any overpayment next year. For example, if you earn $1,000 over the limit this year, $500 would be withheld from next year’s benefits. If you wish to avoid any possible overpayment, you may call the Social Security Administration and ask that your benefits be temporarily suspended. You can restart them at any time with another call to Social Security.
Each year’s earnings limit is announced in mid-October. Should you think that your earnings for the coming year will exceed that limit, you can provide the Social Security Administration your best estimate of anticipated earnings for the following year. The Social Security Administration will determine how many months of benefits you would still be entitled to receive. Your benefits will cease as of January and begin again in the month they are due. The same procedure would be followed in each succeeding year. Effective with the month you reach full retirement age, your benefit will be recalculated to remove the early retirement reduction for any month an early retirement benefit was not paid. All future checks will increase.