How Going Back to Work Affects Social Security

by KYW's Salil Gutt

Given the plunging stock markets, many retirees are heading back into the work force. One of their biggest concerns is what happens to their social security benefits if they work.

Here's a brief primer.

If you are below full retirement age you will lose $1 dollar in benefits for every $2 over the allowed income threshold of roughly $13,000. Full retirement age is not necessarily age 65. Currently it is between 65 and 67 depending on age.  However, there are special rules if you go back to work in the first full year of retirement.  If you are over full retirement age then you do not lose any social security benefits regardless of how much you earn. 

Here's the rub for all concerned regardless of age. Your earnings will be subjected to another round of social security taxes. Depending on how much you earn you may even be able to get an increase in your social security benefits when you stop work. Social security counts the top 35 years of earnings when determining benefits to be paid.