Social Security Limits

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The social security limits by earnings

For clients under full retirement age, $1 in benefits will be deducted for each $2 in earnings above the annual limit ($13,560 for 2008, indexed for inflation each year).

  • In the year they reach full retirement age, benefits will be reduced $1 for every $3 over a different annual limit ($36,120 for 2008, indexed for inflation each year) until the month of full retirement age. Then the earnings will no longer affect the amount of monthly benefits, no matter how much they earn.

In other words, there are no social security limits on eranings once you pass full retirement age you could earn $1 million annually and still collect full social security benefits.

 

Social Security Limits on Benefits by Age

No matter what your full retirement age is, you may start receiving benefits as early as age 62. But there are social security limits and reductions if you start benefits prior to full retirement age as shown below.


Note:
If you were born on January 1st of any year you should refer to the previous year in the chart below.


Year of Birth


Full Retirement Age


Age 62 Reduction Months


Monthly % Reduction


Total % Reduction


Monthly % Reduction (spouse)


Total % Reduction (spouse)


1937 or earlier

65

36

.555

20.00

.694

62.50


1938

65
and 2 months

38

.548

20.83

.679

62.92


1939

65
and 4 months

40

.541

21.67

.667

63.34


1940

65
and 6 months

42

.535

22.50

.655

63.75


1941

65
and 8 months

44

.530

23.33

.644

64.17


1942

65
and 10 months

46

.525

24.17

.634

64.58


1943-1954

66

48

.520

25.00

.625

65.00


1955

66
and 2 months

50

.516

25.84

.617

65.42


1956

66
and 4 months

52

.512

26.66

.609

65.84


1957

66
and 6 months

54

.509

27.50

.602

66.25


1958

66
and 8 months

56

.505

28.33

.595

66.67


1959

66
and 10 months

58

.502

29.17

.589

67.08


1960 and later

67

60

.500

30.00

.583

67.50

  1. Monthly and total percentage r eductions are approximate due to rounding. The actual reductions for the worker are .555 or 5/9 of 1% per month for the first 36 months and .416 or 5/12 of 1% for subsequent months. 
  2. The maximum spouses benefit is 50% of the benefit the worker would receive at full retirement age. The monthly % reduction for the spouse does not include that automatic 50% reduction. Percentage reductions are approximate due to rounding.

Social Security Limits on Benefits by Earnings while working

If you earned the maximum amount of social security taxable eranings for the 35 years prior to retirement, the maximum benefit you could receive in 2008 is $2185 per month (at full retirement age). Use the table above to reduce this for those who start benefits prior to full retirement age..

Summary

Knowing how to manage your finances, even your social security decisions, is a challenge.   You can find other related information in our blog Retirement Income.

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