Retirees who worked 40 quarters, 10 years, under social security are eligible
for benefits as early as age 62, but benefits are permanently reduced for each
month of entitlement prior to the full-benefit retirement age, currently age 65.
The age at which unreduced benefits are payable will be increased gradually from
age 65 to 67 over a 21-year period beginning with individuals who reach age 62
in the year 2000. (The age of eligibility for Medicare is not affected by these
Federal CSRS retirees are subject to the Windfall
Elimination Provision (WEP) that reduces Social Security benefits for those
with less than 30 years of substantial coverage and who earned a retirement
benefit from employment not covered by Social Security - your CSRS service for
example. If you are subject to WEP, your earned Social Security benefits will be
calculated using a modified formula. The modified formula IS NOT used in
computing survivor benefits upon your death. Generally speaking, a CSRS
retiree's social security will be reduced. The current maximum reduction is
CSRS retirees with active military time that are eligible to collect Social
Security at age 62, will see their CSRS annuity decrease unless you
buy back your military time. If you served 4 years military service and
didn't buy back your military time, your federal CSRS annuity will decrease by
approximately 8%., 2% for each year of military service. If you pay your
military time back your annuity will not decrease and you will also collect a
Social Security check.
A beneficiary between age 62 and their full retirement age
can lose some or all of their Social Security benefit by working. This is
because beneficiaries are subject to earnings limits. These limits are set
each year and differ by age group. In 2012, the limit is $14,640/yr.
($1,220/mo.) for beneficiaries under full retirement age. In 2012, the year
you reach your full retirement age, the limit is $38,880/yr. ($3,240/mo.).
After reaching full retirement age there is no limit to the amount of
earnings and no loss of benefits. Beneficiaries who expect to earn more than
the annual limit are asked to contact Social Security so that the benefit
can be adjusted promptly.
Earnings must be reported by April 15 of each year and
failure to report expected earnings may result in an overpayment.
This is in addition to Federal income tax returns.
Earnings which exceed the limits above are considered excess earnings. If
under full retirement age and earning more than the limit, $1 of benefits
will be lost for each $2 of earnings over the limit. In the year you reach
full retirement age and earning more than the limit, $1 of benefits will be
lost for each $3 of earnings over the limit. Social Security recovers
overpayments of benefits by reducing benefits payable to the worker in
future months until the debt is repaid.
Wages received as an employee and net earnings from
self-employment, bonuses, commissions, fees, vacation pay, cash tips of $20
or more a month, severance pay, and earnings from all types of work,
including work not covered by Social Security count for the earnings test.
This is only a factor for earned income, income from
investments and rental property are not included and will not impact your
Social Security payments at any age.
Starting with the month you reach full retirement age,
there are no earnings limits for your Social Security benefits.
Receiving Benefits While You Work - Clarification
When you reach your full retirement age, you can work and
earn as much as you want and still receive your full benefits. If you are
younger than full retirement age and if your earnings exceed $14,640/yr.,
some of your benefit payments during tee year will be withheld.
This does not mean you must try to limit your earnings. If
Social Security withholds some of your benefits because you continue to work,
they will pay you a higher monthly benefits amount when you reach your
full retirement age.
IMPORTANT: If you continue to
work and earn more than the exempt amount, you should know that it will not,
on average, reduce the total value of lifetime benefits you receive from
Social Security and may actually increase them.
Here is how it works: after reaching full retirement age, Social
Security will recalculate your benefit amount to give you credit for any
months in which you did not receive some benefit because of your
earnings. In addition, as long as your continue to work, they will check
your record every year to see whether the additional earnings will
increase your monthly benefit.
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