- In general, the higher your income, the lower your Social Security benefit. The U.S. government reduces your Social Security payment based on the amount of earned income you have. For most people, earned income consists of wages and earnings from self-employment, although certain royalty, honoraria and sheltered workshop payments are also considered earned income.
- Retirement and savings income, like income from pensions, IRA distributions, 401(k) distributions, dividends and interest are not considered earned income and do not affect the amount of your Social Security benefit. They do, however, affect your adjusted gross income, which might affect the amount of tax you have to pay on your Social Security benefit.
- You can continue to work while you receive Social Security, and your benefit will only be reduced until you reach full retirement age. Until you reach full retirement age, the Social Security Administration will deduct $1 from your Social Security payment for every $2 you earn above an annual limit, which was $14,160 at the time of publication.
- The U.S. Social Security Administration provides several online calculators to help you estimate how your Social Security benefit will change based on a number of factors such as earned income and the age at which you begin to receive Social Security. These calculators can help you make decisions such as whether to retire early and take a reduced benefit or wait until full retirement age to receive the full benefit.
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