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Study Up On Earnings Test For Social Security Benefits

The Social Security retirement benefits you'll receive can supplement your income from other sources, but there's a catch: Benefits may be reduced if you're still working. It all has to do with the Social Security "earnings test."

Generally, you can begin collecting Social Security benefits as early as age 62, but the longer you wait to start, the larger your monthly benefit will be. In addition, until you reach what Social Security considers your "full retirement age" (FRA), you may lose part of your benefits if you're still on the job. (If you were born in 1943, or later, your FRA will range from 66 to 67.) Short of that age, your benefits will be reduced to the extent your earnings exceed an annual limit.

This earnings limit is adjusted annually. If you'll hit FRA after 2017, the exempt amount in 2017 is $16,920. For every $2 you make above that limit, you'll lose $1 in benefits.

If you'll reach FRA during 2017, the annual exempt amount is $44,880, but it applies only to what you earn before the month you attain FRA. In this case, you'll lose $1 of benefits for every $3 over the limit. Anything you make during or after the month you hit FRA won't reduce your Social Security payments.

Every situation is different, but you generally should wait to apply for benefits until you can pass the earnings test. Keep an eye on the limits.