Working While Collecting Social Security

hey what's up everyone the lesson here for money evolution and in today's video I'm gonna be talking about what you need to know if you're planning on working while collecting your Social Security benefits so this topic has become one of the most popular topics here on our youtube channel in fact I recorded the video a couple of years ago and it continues to be the one that's watched more than any other video that we have here but there also continues to be a lot of questions that are asked about this topic as well in fact actually just recently here within the last couple of weeks I had a couple of really great questions emailed into me so I thought maybe it's time to kind of refresh this video a little bit maybe address those questions a little bit more specifically so it can be a little bit more clear for you and also update some of the numbers here for 2019 so you have some of those latest figures here so when we're talking about working while collecting Social Security the Social Security Administration has some very specific rules and guidelines first of all there's some rules that apply to those years before your full retirement age so remember you can collect your Social Security benefits as early as age 62 and we're going to assume for this example here that your full retirement age is age 67 so in the year that you turn 66 in this example all the way backwards to age 62 is the time period that we're talking about and under those circumstances you're allowed to earn seventeen thousand six hundred forty dollars per year without having your benefits reduced if you go over that your benefit is going to be reduced by $1 for every $2 that you're over that limit so to take a quick example here let's say that you earn twenty seven thousand six hundred forty dollars so the quick math on that is that we're exactly ten thousand dollars over that limit so again if we just simply divide ten thousand dollars the amount is your over that limit by two that's going to mean that five thousand dollars of your Social Security benefit is going to be reduced okay so if you're making let's say twelve thousand dollars a year from Social Security you're actually only going to get after that five thousand dollars is taken out you're actually only gonna get seven thousand dollars so we can very quickly figure out you know how much you would be earning where your entire benefit would get wiped out so if your entire benefit is is $12,000 for the year if you earn basically $24,000 over the limit you're gonna have your entire benefit taken away okay so hopefully that makes sense okay so one of the areas that continues to get a lot of questions in fact is we're just the specific emails that I got just here recently is well what happens if I retire let's say if I retire at age 64 and let's say you're planning on retiring August first okay but you're still making your full income there up until those months prior to August 1st and you turn on your benefit after August 1st okay does it matter how much money you earn prior to that and the answer is no okay so it doesn't matter if you made $50,000 in those seven months prior to August 1st when you turn on that social security benefit doesn't matter if you made a hundred thousand or even two hundred thousand dollars you're only going to have your benefit reduced for those months that you're actually collecting the Social Security benefit if you're over those thresholds okay and what they do is if you divide this simply by twelve they're gonna let you have I got my note card here it's fourteen hundred seventy dollars so basically in only the months that you're collecting your Social Security benefit if you go over fourteen hundred and seventy for any month that's when your benefit is going to start to get taken away from you now if you do have your benefit taken away it's not technically lost forever because when you reach your full retirement age they're going to adjust your payment to basically account for any of those months where they took away some benefit now let me tell you this is actually kind of what the last video that I did a couple years ago was all about was a client of ours that retired at age 62 started collecting his Social Security benefits right away and then maybe about a year and a half later it got called back into work started making a lot more than the threshold for Social Security and ended up getting his entire benefit taken away well when he reached his full retirement age he started getting these reconciliation letters pretty much every year we overpaid you by X number of dollars for the year so therefore we're going to reduce your future benefit for the next year by X number of dollars or we underpaid you by a certain amount so we're giving you a lump sum check of X number of dollars you know it got really really confusing we would through it I crunched a whole bunch of numbers there's a lot of secret sauce here behind some of these social security numbers but I did my best and you know it looks like it's pretty much about right but really it's a very difficult calculation and my recommendation then and still today has always been that if you're planning on earning more than these limits then you probably should just turn off your social security benefit or not collect them and remember you're taking a discount for every year that you're taking that social security benefit early anyway so that's a benefit that's locked in for the rest of your life so if you're taking your benefit at 62 and you're still working you're missing out on a lot of extra money that you could be making by delaying those Social Security benefits okay so now let's move on let's talk about what happens in the year that you reach your full retirement age okay so it doesn't matter if you reach full retirement age on January 1st or December 31st or somewhere in-between for just that year you they increase the amount of earnings that you're allowed to have and they increase that for just the months prior to your full retirement age okay so let's say that your birthday is on July 1st okay so what that means is you have six months of the year and during those first six months let's say you turn on your benefit on January 1st okay you're allowed to earn in those first six months of the year forty-six thousand nine hundred and twenty dollars if you go over that they're going to reduce your benefit by one dollar for every three dollars that you earn over that number okay so if you earned let's say twelve thousand dollars over that limit basically twelve thousand divided by three means that your benefit is going to be reduced by four thousand dollars in that example there so they give you a lot more leeway and again it doesn't matter when your birthday is okay so if your birthday is on March 1st and there's two months before your full retirement age you're allowed to earn up to forty six thousand nine hundred twenty dollars in just those first two months consequently if your birthday is later in the year then you have you know that same forty six thousand nine hundred or you know ten or eleven months you know so there's there's some differences there depending on when your birthday is so hopefully that makes sense I know this is gets a little bit confusing here lots of numbers and things so we just remember so once you reach your full retirement age there's no limitation on your earnings okay so as soon as you hit that month there's no limitations on how much money you can make and then from then on out all the way through even if you continue to work in age 68 69 and 70 there's not going to be any reduction to those social security benefits only before your full retirement age and a little bit in the months before your birthday month when you reach that full retirement age so anyway I hope this has been helpful I hope that we added a little bit more clarification compared to the last video that we did again if you want to link up to that video to reference it we'll put the link here right below the video here today it's still a good idea to go back and watch that because I kind of take it from a little bit frame of reference I get into a little bit more detail on the specifics I think I actually read some of the specific verbage from those letters from Social Security so you might get a kick out of that as well and might be a little entertaining for you so anyway there you have it that's what you need to know about working while collecting Social Security benefits remember hit that like or subscribe button especially if you like what we're doing here we're going to continue to come back to you with some informational videos about this topic and with that I will see you back in one of my next videos have a great day thanks

Channel: Money Evolution

Views: 502,814

Rating: 4.9312978 out of 5

Keywords: yt:cc=on, working and collecting social security, how much can i earn while drawing social security, how much can i earn while on social security, social security earnings limit 2019, social security questions, social security retirement, social security earnings limit, working and social security, retirement income planning, working and drawing social security, social security explained, social security retirement benefits explained, social security and working

Id: jmO9XKc5ZWo

Length: 7min 59sec (479 seconds)

Published: Tue Apr 09 2019