Some people think working and collect social security at the same is not allowed. You can do both concurrently but between the ages of 62 and your full retirement age, which differs for some people, there is a cap on how much you can earn each year before experiencing a penalty. I’ve attached a full retirement age grid for reference. As of 2023 an eligible social security recipient can make no more than $21,240 per year without a reduction in social security benefits. Each year that figure goes up slightly. For each $2 you over the limit you owe $1 to the Social Security Administration.
The calendar year you reach your full retirement age, and only that year as of 2023, the income cap is $56,250. If you go over that amount, for every $3 dollars over the limit you owe $1. Starting the calendar year after your full retirement age your annual income is unlimited, no caps.
What happens to the money you paid due to these penalties, the social security overpayment funds? Can you reclaim those funds? Yes. The calendar year after your full retirement age, the funds get added back into the formula and your monthly benefit is recalculated.
There are various forms of income that are used towards the social security earnings limit, it isn’t just what shows on your W2. Here’s a list of incomes allowed and not allowed per the social security website, it’s very detailed.
For a married couple, the social security earning limits are for each spouse. It’s not $21,240 for a couple, it’s for each person.
If you need to claim social security benefits early, prior to your full retirement age, you will get a lower monthly benefit but if you are unable to work past the age of 62, or prior to your full retirement age or until 70, when your social security benefit reaches its maximum, a reverse mortgage line of credit can be used to draw from to fill the cash flow gap either when working and collecting social security or drawing social security and delaying to take social security until a later age, when the monthly benefit is higher. I have a Youtube video that explains how this works. It doesn’t always make sense to apply this strategy, it all depends on a variety of factors, everyone’s numbers and situation are different. I can run the numbers and put in a video format with amortization tables for you to see, just fill out the below information below and we can chat about your scenario. In some of these scenarios, cash flow and quality of life may be of more importance than the interest expense on the reverse mortgage, making the number crunching a moot point, everyone’s need is different.
I have originated California reverse mortgages for over twelve years and am a licensed Ventura County California RSSA and help people nationwide with all things social security.
Best,
KW