Good News, Retirees: Earn More Next Year Without Affecting Social Security

Many seniors want to work a little bit after claiming Social Security in order to increase their household income — and with good reason, since retirement benefits aren’t enough to live on.

Unfortunately, earning too much money could sometimes affect your continued eligibility for Social Security retirement benefits. The good news, though, is that fewer older Americans will have to worry about that next year because of this important change.

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A higher paycheck won’t affect Social Security benefits as much in 2022

For seniors interested in working while receiving retirement benefits, it’s crucial to know the rules that apply because running afoul of them could accidentally result in a loss of Social Security checks.

See, if you are over full retirement age (FRA), you are allowed to work and earn as much as you’d like without any consequences for your Social Security checks. But seniors won’t reach that milestone until they’re at least 66 years and 2 months old. Depending on birth year, some retirees won’t hit FRA until 70. Since retirement benefits can be claimed starting at age 62, many seniors have years they could potentially receive paychecks from a job before hitting FRA.

During these intervening years when you’re getting benefits but haven’t reached your full retirement age, working can have consequences with regards to Social Security checks. But that only happens once your income hits a certain threshold — and the income you can bring in before benefits are affected is going up in 2022.

Here’s the 2022 change to Social Security’s work rules

Next year, retirees who will not reach full retirement age for the entire year are allowed to earn up to $19,560 per year or $1,630 per month without having their Social Security checks affected. This is up from $18,960 annually or $1,580 monthly in 2021. For seniors who will reach FRA at some point during the year but who are working before that time, they can earn $51,960 per year or $4,330 per month in 2022 before losing benefits, up from $50,520 or $4,210 per month in 2021.

Working seniors who won’t hit FRA at any point during the year will lose $1 in benefits for every $2 in income above the income limit, while those who will reach FRA but are working before it end up forfeiting $1 in benefits for every $3 in excess income.

The loss of Social Security funds can be a big hit to retirees, many of whom may have been counting on getting both a paycheck and retirement benefits to help them make ends meet. That’s why it’s such good news that the earnings threshold before benefits are affected is going up.

Of course, those who do forfeit benefits won’t lose them forever. Retirees who miss checks because they earn too much will have their Social Security benefit amount recalculated when they do reach full retirement age. Their checks will grow because of the foregone benefits, although the increase is small and it can take years to earn back all the missed money.

The good news is, with next year’s higher earnings threshold, fewer seniors will be subject to this benefit reduction and more retirees who work part-time or full time will still get to keep the full amount of their Social Security while also bringing home a paycheck.

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