Earn (and Keep) More Money

You probably already know that there was an increase in Social Security and Supplemental Security Income (SSI) monthly payments at the beginning of the year. If you receive monthly Social Security or SSI payments, you received a 3.6 percent cost-of-living adjustment beginning with your payment for January 2012.

For people who receive Social Security retirement benefits, there's more good news. In addition to receiving a little more each month, you may now earn more income without offsetting your benefits because the "earnings test" numbers also have gone up.

If you have reached your full retirement age (age 66 for anyone born between 1943 and 1954), the earnings test does not apply and you may earn as much money as you can without any effect on your benefits. However, if you are younger than full retirement age, collecting benefits and still working, the Social Security Administration does offset some of your benefit amount after a certain earnings limit is met.

For people who started their benefits before age 66, continue working and reach age 66 in 2012, the annual exempt amount is $38,880 and Social Security will withhold $1 for every $3 you earn over the limit from your monthly benefits. After you reach your full retirement age, you can earn as much money as you wish and Social Security will not offset your benefits. For example, if you reach age 66 on July 15, 2012 you can earn $38,880 between January 1st and the end of June and still receive all of your payments.

You can learn more about the earnings test and how benefits may be reduced by visiting www.socialsecurity.gov and searching on the topic "earnings test." Find out what your full retirement age is at www.socialsecurity.gov/pubs/ageincrease.htm. You also may want to read How Work Affects Your Benefits, available at www.socialsecurity.gov/pubs/10069.html. 

—Kirk Larson, Social Security Western Washington