Q & A

Ask Rusty – Suspending Benefits to Return to Work

Dear Rusty:   At age 63 I applied for Social Security benefits after double knee replacement. I am considering returning to work and am curious whether to stop benefits while working. Is it a better avenue to continue to receive benefits and monitor my total earnings and connect with Social Security as I reach my maximum earnings level?  If so what is my responsibility to maintain proper correspondence with the Social Security Administration?  And am I responsible to report earnings so I am not overpaid and penalized? I turned 64 on October 23.  Signed:  Returning to Work

Dear Returning: I’m glad you’ve recovered from your knee surgery and are back on the road to working.   I assume that when you applied at age 63 you claimed regular Social Security early retirement benefits. If that is the case, and if more than one year has passed since you started collecting benefits, you cannot suspend your benefits until you reach your full retirement age of 66. If less than a year has passed since you first filed, you can exercise the “do over” option and withdraw your application for benefits, but you’ll have to repay everything you have collected, including any spousal benefits your wife may be receiving and any withheld income taxes. If you work before your full retirement age while collecting Social Security and you exceed the annual earnings limit ($17,040 for 2018), Social Security will withhold from future benefits $1 for every $2 you earn over the limit. This is the case up until the year you will reach your full retirement age when the earnings limit increases substantially ($45,360 in 2018; the limits change annually) and the benefit reduction is less ($1 for every $3 over the limit).  Any time you know you’re going to exceed the earnings limit, you should call your local Social Security office (find it at www.ssa.gov/locator) and let them know. They will compute the amount to withhold and take it out of future benefits. If you don’t correspond with them (by phone is okay) about exceeding the limit, they will eventually catch up to you when you file your income tax return, send you a notification letter and withhold what’s due them from your benefits at that time. Basically the onus is on you to advise them you will be over the limit, but they will catch up to you if you don’t.  Once you reach your full retirement age the earnings limit goes away and you can earn as much as you want without it affecting your Social Security benefit.  One final note:  When you reach your full retirement age, Social Security will give you time credit for any months they withheld benefits due to you exceeding the earnings limit.  That means that your benefit amount at full retirement age could increase slightly, essentially giving you back over time some of the benefits they withheld.

The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed are the viewpoints of the AMAC Foundation’s Social Security Advisory staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA, the AMAC Foundation, and the Foundation’s Social Security Advisors are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government. Furthermore, the AMAC Foundation and its staff do not provide legal or accounting services. The Foundation welcomes questions from readers regarding Social Security issues. To submit a request, contact the Foundation at info@amacfoundation.org.

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