2005-12-09 / Columnists

Social Security And You

By James Glasser, Manager, Far Rockaway Social Security Center

James GlasserJames Glasser The arrival of holiday decorations in shopping malls and stores also signals the arrival of job opportunities.

The winter holiday season is a time when some merchants increase their staffs and many people take seasonal jobs.

Some of these seasonal workers are retired men and women who get Social Security benefits. If you are one of them, you may be wondering if the wages from your holiday work could affect your benefits.

Here is a quick run-down of what you need to know.

If you have reached your full retirement age before 2005 (between age 65 and 67, depending on the year you were born) you can earn as much as you want and Social Security won’t reduce your benefits by as much as a nickel.

But, if you are younger than your full retirement age, and you are working and receiving early retirement benefits, there are limits to what you can make before your Social Security retirement benefit is reduced. For 2005, that earnings limit is $12,000. After you earn $12,000 for the year, Social Security will withhold $1 in benefit payments for every $2 you earn. (In 2006, the annual earnings limit will rise to $12,480.)

The earnings limit exemption is just a little more complicated if you reached your full retirement age this year (or next year if you’ll be working beyond December 31). In that situation, your earnings limit would be $31,800 ($33,240 in 2006) for the months before your full retirement age, and Social Security will withhold $1 in benefit payments for every $3 you earn over the limit. Also, beginning with the month you reach your full retirement age, you can earn as much as you want and it will not affect your Social Security benefits.

Regardless of the amount you earn, your employer is required to withhold payroll taxes — even if you’re already getting Social Security benefits.

The good news about the payroll tax withholding is the possibility that those extra taxes could translate into a higher Social Security benefit. If the money you made during your holiday employment raises your lifetime average monthly wage, Social Security will refigure your benefit and give you an increase. But most people will not see an increase because holiday earnings are usually not enough to increase your average wage during your career earning years.

So, if you are a retired worker with a holiday wish for doing some work, the chances are that you should be able to do so without worrying about a negative affect on your Social Security benefits.

To learn more, you can visit our website at www.social security.gov, or call us at 1-800-772-1213 (TTY, 1-800-325-0778).

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