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Survivors Benefits

What If I Work?

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4/11

Wages and earnings will reduce only the working survivor's benefits, not the benefits of other family members.

Your benefit amount will only be reduced until you reach your full retirement age.

Social Security uses the following formula to determine how much your benefit must be reduced:

  • If you are under full retirement age when you begin receiving your Social Security benefits, $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2010, that limit is $14,160.
  • In the year you reach full retirement age, $1 in benefits will be deducted for each $3 you earn above a different limit, but only for the months before the month you reach the full retirement age. For 2010, this limit is $37,680. Starting with the month you reach full retirement age, you can receive your full benefits with no limit on your earnings.

Following are examples of how the rules would affect you if you are a working survivor:

  • Let's say you begin receiving Social Security benefits at age 62 in January 2010 and you're entitled to $600 a month ($7,200 for the year). During the year, you work and earn $20,000 ($5,840 over the $14,160 limit). Social Security will withhold $2,920 of your Social Security benefits ($1 for every $2 you earn over the limit), but you would still receive $4,280 in benefits.
  • Now, let's say you reach full retirement age in August 2010. You earned $38,400 in the seven months from January through July. During this period, the amount of benefits Social Security withholds would be $720 ($1 for every $4 you earned above the $37,680 limit.)

Starting in August (when you reach 65), you would begin receiving your full benefits, no matter how much you earn.

What Income Counts:

If you work for someone else:

  • Only your wages count toward Social Security's earnings limits. Social Security doesn't count non-work income such as other government benefits, investment earnings, interest, pensions, annuities and capital gains.

If you're self-employed:

  • Social Security counts only your net earnings from self-employment. Social Security doesn't count non-work income such as other government benefits, investment earnings, interest, pensions, annuities and capital gains.

When the Income Counts:

If you work for someone else:

  • Income counts when it is earned, not when it is paid. If you have income that you earned in one year but the payment is deferred to the following year, it should not be counted as earnings for the year you receive it. Some examples of deferred income include accumulated sick or vacation pay and bonuses.

If you are self-employed:

  • Income counts when you receive it--not when you earn it -- except if it is paid in a year after you become entitled to Social Security and was earned before you became entitled to Social Security.
  • For example, if you start getting Social Security in June 2010 and you receive some money in February 2011 for work you did before June, it will not count against your 2010 earnings limit. However, if the money you receive in February 2011 was for work you did after June, it will count against your 2010 earnings limit.
  • Social Security considers whether you perform substantial services in your business. One measure of your service is the amount of time you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired. If you work less than 15 hours a month, you are retired. Work between 15 and 45 hours a month may be considered substantial if you work in an occupation that requires a lot of skill or you are managing a sizable business.

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