23 Nov Will my Social Security benefits be penalized if I work?

Q. I was born in 1959 and I’m 62 years old. My Social Security full retirement age is 66 years and 6 months. I’m working and I earn $110,000 a year. Will I be penalized by Social Security if I take my benefit now? Will I be penalized if I collect at 66 years and 6 months and continue to work?
— Still working

A. As it seems you are aware, there is a reduction in Social Security benefits if you work in certain circumstances.

What it comes down it are limitations on earned income for anyone receiving Social Security benefits before their full retirement age.

For 2022, if you are younger than your full retirement age (FRA), Social Security will deduct $1 from your benefit for every $2 of earned income over $19,560, said Nicholas Scheibner, a certified financial planner with Baron Financial Group in Fair Lawn.

He said the easiest way to do the math is to take your annual current earnings and subtract the annual limit, then divide it by 2:

$110,000 – $19,950 = $90,050. Divided by 2 = $45,025 of reduction.

“If your annual Social Security benefit is less than the reduction amount, you’ll get $0 in benefit,” he said. “Social Security will withhold your payment each month, until the reduction is exhausted.”

Once you hit your full retirement age, you can work as much as you want with no reduction, Scheibner, said.

If you reach your full retirement age for part of the year, the limit on your earnings before the month of your FRA is $51,560, he said. That reduction is $1 for every $3 earned.

“If your income is $110,000, more than likely you will see no Social Security benefit even if you file,” he said. “There would be very little benefit to filing for Social Security benefits while you are still working and making your current salary of $110,000.”

Email your questions to .

This story was originally published on Nov. 23, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.