Introduction
If you’re receiving Social Security benefits, you may wonder how much money you can earn while still keeping your benefits. While earning additional income can be challenging, it can also provide a significant boost to your finances and improve your quality of life. This article will explore how much money you can earn while on Social Security and offer practical tips for maximizing your income. Whether you’re considering part-time or full-time work, entrepreneurship, or gig economy jobs, you’ll find helpful information and resources here.
Overview of Social Security Earnings Limits
First, let’s take a closer look at how much money you can earn while receiving Social Security benefits. There are two types of earnings limits:
- The retirement earnings test applies if you’re under full retirement age (currently 66) and receiving Social Security retirement benefits. For every $2 you earn above the annual limit (adjusted each year), your benefits will be reduced by $1.
- The Social Security Disability Insurance (SSDI) trial work period applies if you’re receiving disability benefits and attempting to return to work. During the trial work period, you can earn any amount without affecting your benefits. The trial work period lasts nine months, after which you’ll enter the extended period of eligibility, during which your benefits can be reduced if you earn over the substantial gainful activity (SGA) level (currently $1,310 per month).
The earnings limits are calculated annually based on inflation and other factors. The reduction in benefits is calculated monthly, and any reduction can be restored once you reach full retirement age or complete the trial work period. Note that earnings from pensions, annuities, and investments don’t count towards the earnings limit.
Here’s an example: Let’s say you’re 62 years old and receiving $1,500 per month in Social Security benefits. The annual earnings limit for 2021 is $18,960. If you work part-time and earn $24,000 in 2021, your benefits will be reduced by $2,520 ($1 for every $2 over the limit). That means you’ll receive $980 per month ($1,500 – $2,520/12) instead of $1,500. However, once you reach full retirement age, your benefits will be adjusted to reflect the reduction, so you won’t lose the money permanently.
Ways to Maximize Social Security Earnings
While the earnings limits can be challenging, there are many ways to maximize your income while staying within the limits. Here are some tips:
- Consider part-time or flexible work that allows you to control your schedule and workload. Even a few hours of work per week can add up over time.
- Use your skills and hobbies to earn money. For example, if you enjoy gardening, you can sell your produce or offer landscaping services. If you’re good at crafts, you can sell your creations online or at local markets.
- Explore online or gig economy jobs that allow you to work from home or on your own schedule. Examples include freelance writing, graphic design, tutoring, or delivery services.
- Take advantage of social security work incentives, such as the ticket to work program, which provides free training and job placement services for disability beneficiaries.
- Get support and advice from social security work incentives planning and assistance (WIPA) programs available in every state. These programs offer information, training, and counseling to help you make informed work choices.
By pursuing these strategies, you can increase your income, build your skills, and contribute to your community while maintaining your social security benefits.
Employment Opportunities for Social Security Beneficiaries
The Social Security Administration (SSA) offers many work incentives and programs to support beneficiaries who want to work or start their own businesses. Here are some examples:
- The extended period of eligibility: If you’re receiving SSDI benefits and your income exceeds the SGA level, your benefits will be reduced. However, during the extended period of eligibility (36 months after the trial work period), you can still receive benefits for any month in which your earnings fall below the SGA level.
- The plan to achieve self-support: If you’re a disability beneficiary and want to start a business or pursue self-employment, the plan to achieve self-support (PASS) program can help you set aside income for expenses related to your work, such as training, equipment, or transportation.
- The work incentives for blind people: If you’re blind and receive social security benefits, you can earn more money each month without affecting your benefits. The earnings limit for blind people is currently $2,190 per month.
Additionally, some industries or jobs are particularly suitable for social security beneficiaries due to their flexibility, skills requirements, or opportunities for training and advancement. Here are some examples:
- Home healthcare and personal care aide
- Customer service representative
- Retail sales associate
- Freelance writing or graphic design
- Delivery driver or courier
By exploring these options and taking advantage of SSA programs, you can find fulfilling work that matches your abilities and preferences.
Impact of Working on Social Security Benefits
It’s important to be aware of the impact that earning money can have on your social security benefits. Here are some factors to consider:
- Federal income taxes: If your combined income (including wages, pensions, and other income sources) exceeds a certain level, you may have to pay federal income taxes on a portion of your benefits. The exact level depends on your filing status and income sources, but it’s typically between $25,000 and $34,000 for individuals and $32,000 and $44,000 for couples filing jointly.
- State income taxes: Some states also tax social security benefits, so check your state tax laws to see if you’re affected.
- Reduction in benefits: As we discussed earlier, if your earnings exceed the annual limit or the SGA level, your benefits will be reduced. However, as long as you stay within these limits, you can earn additional income without losing your benefits permanently.
- Work incentives: The SSA offers many work incentives that can help offset the effects of earning money on your benefits. For example, the impairment-related work expenses (IRWE) provision allows you to deduct some of your work-related expenses from your countable income, reducing the amount that will be used to calculate your benefits reduction.
By understanding these factors and working with a social security representative or WIPA program, you can manage your earnings and benefits to ensure maximum income and financial security.
Case Studies or Real-Life Examples of Social Security Beneficiaries Earning Money
Now let’s hear from some real-life examples of social security beneficiaries who have successfully earned money while staying within the earnings limits.
- Pamela is a 65-year-old retiree who enjoys gardening. She started a small business selling plants, herbs, and landscaping services. She makes around $12,000 per year from her business, which is below the annual limit, so her benefits are not affected. She enjoys the extra income and the satisfaction of running her own business.
- John is a 55-year-old man who lost his job due to a medical condition. He receives SSDI benefits and wants to return to work part-time. He found a job as a customer service representative that allows him to work from home and make around $1,500 per month. He is in the trial work period, so he can earn any amount without affecting his benefits. He hopes to continue working full-time once he completes the trial work period.
- Sofia is a 50-year-old woman who is blind and receives social security benefits. She started a blog about her experiences as a blind person and shares tips, stories, and advice. She earns around $800 per month from advertising and sponsorships. Because she is blind, she is eligible for the higher earnings limit, so her benefits are not affected.
These examples show that earning money while on social security benefits is possible and can be rewarding. By finding the right opportunity and managing your income, you can improve your finances and your sense of purpose and achievement.
Tips and Best Practices for Balancing Earning Money and Receiving Social Security Benefits
Here are some key takeaways and tips for balancing earning money and receiving social security benefits:
- Understand the earnings limits and how they apply to your situation.
- Explore different ways to earn money, including part-time work, self-employment, and gig economy jobs that match your skills and preferences.
- Take advantage of work incentives and programs offered by the SSA to maximize your income and reduce the impact on your benefits.
- Use resources such as social security representatives, WIPA programs, and online job portals to find opportunities and get support and guidance.
- Be aware of the tax implications and reduction in benefits that can result from earning money, and work with a financial advisor to manage your income and expenses.
By following these best practices and staying informed and proactive, you can achieve financial stability and independence while enjoying the benefits of social security.
Conclusion
Earning money while on social security benefits may seem daunting, but it’s an important and feasible goal that can improve your finances and overall well-being. By understanding the earnings limits, exploring employment and entrepreneurship opportunities, and taking advantage of work incentives and resources, you can maximize your income and achieve your goals. We hope this article has provided you with valuable insights and inspiration to take action and pursue your dreams.
Thank you for reading, and please share your own tips and experiences in the comments or on social media.
