# Income allowed with Social Security **URL:** \ **Category:** Factual Questions\ **Created:** [December 14, 2016, 12:09am UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645 "2016-12-14T00:09:25Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Colibri](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/colibri/32/1841_2.png) [@Colibri](https://boards.straightdope.com/u/Colibri)\ **Post date:** [December 14, 2016, 5:42pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/21 "2016-12-14T17:42:23Z")
> [@Really\_Not\_All\_That\_Bright](#): > > There is no income limit for full retirees. SSDI and early SSR recipients are subject to having their benefits offset against wages/salary. Is there any distinction between if you’re receiving wages/salary and being self-employed? Some material I read implied that if you were self-employed, there were some qualifications on whether you could be considered “retired.” I reach my full retirement age (66) in September of next year. I haven’t taken Social Security yet because of the reduction in benefits based on how much you earn. However, it’s my understanding that if I take Social Security starting in the calendar year I turn 66, my benefits won’t be reduced as long as I don’t earn over a certain limit before my birthday. Do you know anything about this? ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 14, 2016, 6:13pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/22 "2016-12-14T18:13:40Z")
> [@Kimballkid](#): > > I work for the state as a civil service employee and I pay into Social Security. So do I , but I think that **Really Not All That Bright’s** point is there are few , if any non-government jobs where you would run into the pension offset as nearly all other employment requires SS contributions. ---
**Author:** ![Kimballkid](https://avatars.discourse-cdn.com/v4/letter/k/b5a626/32.png) [@Kimballkid](https://boards.straightdope.com/u/Kimballkid)\ **Post date:** [December 14, 2016, 7:17pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/23 "2016-12-14T19:17:16Z")
Oh, OK. ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [December 14, 2016, 7:33pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/24 "2016-12-14T19:33:29Z")
> [@Ravenman](#): > > The term “borrowing” is misleading. Surpluses in the trust fund are used to buy Treasury-issued securities, which are constitutionally guaranteed under the 14th Amendment to be paid back with interest. If one takes the term “borrow” at face value, it implies that there is a chance for default. This is not the case, as the Constitution prohibits default for these sorts of transactions involving U.S.-guaranteed debt. > > The issue that others raised, as to the self-sufficiency of the Social Security system (i.e., will the payroll taxes raised be sufficient to guarantee the full level of promised benefits over the long term) is a different and more pressing issue. Here I stand, corrected. ---
**Author:** ![barbitu8](https://avatars.discourse-cdn.com/v4/letter/b/839c29/32.png) [@barbitu8](https://boards.straightdope.com/u/barbitu8)\ **Post date:** [December 14, 2016, 8:22pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/25 "2016-12-14T20:22:11Z")
> [@Colibri](#): > > Is there any distinction between if you’re receiving wages/salary and being self-employed? Some material I read implied that if you were self-employed, there were some qualifications on whether you could be considered “retired.” > > I reach my full retirement age (66) in September of next year. I haven’t taken Social Security yet because of the reduction in benefits based on how much you earn. However, it’s my understanding that if I take Social Security starting in the calendar year I turn 66, my benefits won’t be reduced as long as I don’t earn over a certain limit before my birthday. Do you know anything about this? You reach full retirement age in September next year. If you defer collecting your SS, your benefits will increase 5/9 of 1% for each month of deferral. (Likewise, if you take early retirement, your benefits are reduced by 5/9 of 1% for each month of early retirement – not 8% a year as previously posted. That would have come to a 20% reduction if you retired at age 62 - the earliest - when full retirement age was 65.) Once you reach full retirement age, you can earn as much as you want without penalty, and that includes self-employment. To correct a previous post, if you receive benefits because of disability it means that you are unable to engage in substantial gainful activity. However, you are entitled to a trial work period in which there is no limit to earnings. IIRC, this twp is 9 months, but is unavailable if you had a prior period of disability. ---
**Author:** ![barbitu8](https://avatars.discourse-cdn.com/v4/letter/b/839c29/32.png) [@barbitu8](https://boards.straightdope.com/u/barbitu8)\ **Post date:** [December 14, 2016, 8:34pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/26 "2016-12-14T20:34:14Z")
[20 CFR § 404.1592 - The trial work period. | Electronic Code of Federal Regulations (e-CFR) | US Law | LII / Legal Information Institute](https://www.law.cornell.edu/cfr/text/20/404.1592) That cite covers the trial work period. You can all the SS regulations here: [20 CFR Subpart P - Determining Disability and Blindness | CFR | US Law | LII / Legal Information Institute](https://www.law.cornell.edu/cfr/text/20/part-404/subpart-P) ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [December 14, 2016, 8:41pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/27 "2016-12-14T20:41:42Z")
> [@CurtC](#): > > The overall problem is that the money Jinx paid in for all these years was not saved for her, it was paid out back then for people who were receiving SS benefits at that time. Sorry, Jinx, your money is gone, and the benefits you get will come from those who will be paying in at that time. Actually Social Security was running a cashflow surplus (that is revenues exceeded payouts) until 2010. So some of that money was saved for her in the Social Security Trust Fund. I don’t know at what point SS stopped running a surplus on an accrual basis with revenues exceeding the present value of future payments. I’m not sure that it ever did, but I suspect so as the tax was collected for a few years before the first benefits were ever paid. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [December 14, 2016, 8:57pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/28 "2016-12-14T20:57:39Z")
Yes and no. There’s two issues: 1. Was **Jinx** ’s money saved? Not really. The part needed for social security payouts was spent immediately. The rest, the so-called SS surplus, was immediately spent on something else like roads or military or … and an IOU substituted for the money. But in one half-assed sense you’re right it was “saved.” 2. Was **Jinx** ’s money saved for **Jinx** specifically? No, not even a tiny smidgen. Not ever. Everyone’s money goes into a giant pot and everyone’s checks come out of a giant pot. In no sense are you getting “your” money back. You’re not getting your money plus interest either. Recipients receive other people’s money according to a formula in a law. Meanwhile taxpayers pay towards those other people according to a different formula in a different law. It’s nice when the two laws and the demographics fit together properly so there’s enough for everyone over time. But there’s no guarantee that’ll be true and in fact it isn’t. We’re still in the era when it still works, but the problem is looming. Very soon something must change. We can change a little bit soon, wait and make bigger changes later, or we can close our eyes and go straight ahead until we hit the iceberg head on at full speed. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [December 14, 2016, 9:41pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/29 "2016-12-14T21:41:54Z")
> [@Oddball\_92](#): > > I receive a pension from the city I retired from. I also receive SS benefits. I did not pay into SS while I worked for the city but I did pay into SS while working a part time job (for over 20 yrs). > I started my SS benefits at age 62. My SS benefits were reduced by about 35% because of my city pension. This is known as the “Windfall Elimination Provision.” What used to happen is that workers who earned a pension from a job that was exempt from Social Security would retire and take a part time job (or take a second part time job while working their main job) and earn the bare minimum amount at the second job to qualify for Social Security benefits. Social Security benefit amounts are skewed towards low-income earners, so they would appear to be low-income earners and receive a nice second pension for very little effort. The Windfall Elimination Provision is meant to adjust for the fact that they were actually not low-income earners, just that their wages from jobs covered by Social Security were low. [Windfall Elimination Provision (pdf).](https://www.ssa.gov/pubs/EN-05-10045.pdf) ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [December 14, 2016, 9:45pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/30 "2016-12-14T21:45:55Z")
> [@JillGat](#): > > I got a notice from the Social Security that says, if I earn above a certain $amount a year while collecting Social Security, they will reduce my SS benefit. Would the retirement pension I’m receiving from my previous workplace be included in that earning, or are they just referring to income made from working now? Can’t seem to find this information on their site. > > (And, anyway, considering I PAID INTO Social Security all those years, it shouldn’t matter how much I earn otherwise after retirement… in my opinion… it’s _my money_; not a perk!) they take out 1 dollar for every 3 you earned over 15 k and it goes up from there until you are 66 My aunt is involved with the California ihss program and thats that they were taking out of hers and they will do it until the exact day you retire … but with her the rules have changed since the courts say if you live with the relative you take care of its not an official job … she dosent even have ot file taxes anymore … ---
**Author:** ![JillGat](https://avatars.discourse-cdn.com/v4/letter/j/9fc29f/32.png) [@JillGat](https://boards.straightdope.com/u/JillGat)\ **Post date:** [December 15, 2016, 6:58am UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/31 "2016-12-15T06:58:21Z")
> [@CurtC](#): > > What do you propose that they do with the money they collect, put it in a giant mattress? As it is now, the surplus is invested in long-term T-bills I believe. > > The overall problem is that the money Jinx paid in for all these years was not saved for her, it was paid out back then for people who were receiving SS benefits at that time. Sorry, Jinx, your money is gone, and the benefits you get will come from those who will be paying in at that time. In other words, a classic Ponzi scheme. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [December 15, 2016, 7:41am UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/32 "2016-12-15T07:41:37Z")
> [@JillGat](#): > > In other words, a classic Ponzi scheme. Do you have a checking account? Because most of that money is gone too, and they keep just enough of everyone’s money around to pay the ones who want some of it today. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [December 15, 2016, 11:24am UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/33 "2016-12-15T11:24:12Z")
> [@JillGat](#): > > In other words, a classic Ponzi scheme. A Ponzi scheme is fraudulent to the extent that the underlying business case for investments is purported to be the source of profits, but does not actually exist, instead relying on new investors to pay big returns to early investors. The business case for Social Security is freely available for everyone to read, so there is no misrepresentation. Nobody is promised big returns, which is in fact a criticism of the system by some. And Social Security, with some tweaks in the past, has and is expected to remain solvent for about a century (from its inception to a couple decades from now), and with some further tweaks would remain solvent for decades more. I really urge you to consider whether insurance policies are a Ponzi scheme - your car insurance, home insurance, life insurance, whatever. They really do operate on the same principles. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [December 15, 2016, 2:10pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/34 "2016-12-15T14:10:17Z")
> [@Colibri](#): > > Is there any distinction between if you’re receiving wages/salary and being self-employed? Some material I read implied that if you were self-employed, there were some qualifications on whether you could be considered “retired.” > > I reach my full retirement age (66) in September of next year. I haven’t taken Social Security yet because of the reduction in benefits based on how much you earn. However, it’s my understanding that if I take Social Security starting in the calendar year I turn 66, my benefits won’t be reduced as long as I don’t earn over a certain limit before my birthday. Do you know anything about this? It really comes down to how you define what you do. If you get a W2 you’re sure going to trigger it. A 1099 may or may not depending on how your accountant sets up your return. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [December 15, 2016, 2:14pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/35 "2016-12-15T14:14:07Z")
Here’s the income chart I use: Prior to full retirement age (FRA): for 2016 you can earn $15,720 without penalty. After that you lose 1 in SS for every $2 you earn above the cap. During your FRA year it’s $41,880 with a penalty of $1 for every $3 above the cap. At and beyond FRA there’s no limit and no penalty. If you retire mid-year of your FRA and are above the limit you may have the ability to use a monthly calculation to avoid penalty. But that’s not locked in stone. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 15, 2016, 2:28pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/36 "2016-12-15T14:28:04Z")
> [@Colibri](#): > > Is there any distinction between if you’re receiving wages/salary and being self-employed? No. Net self-employment income is treated identically to wages or salary from an employer for the purposes of SS benefit reduction. I defer to **JC** on how earnings in your retirement year affect your benefits. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [December 15, 2016, 5:53pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/37 "2016-12-15T17:53:10Z")
> [@Ravenman](#): > > The term “borrowing” is misleading. Surpluses in the trust fund are used to buy Treasury-issued securities, which are constitutionally guaranteed under the 14th Amendment to be paid back with interest. If one takes the term “borrow” at face value, it implies that there is a chance for default. This is not the case, as the Constitution prohibits default for these sorts of transactions involving U.S.-guaranteed debt. The 14th Amendment does _not_ apply here. Uncle Sam can write as many IOU notes saying “I owe Uncle Sam one billion dollars, signed Uncle Sam.” and it is complete financial malarkey. A note from an entity to itself is just a worthless piece of paper. It is _not_ an asset, it is _not_ a debt. It’s just political shenanigans. It is astonishing how many people fall for this stupid trick. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [December 15, 2016, 7:22pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/38 "2016-12-15T19:22:54Z")
> [@ftg](#): > > The 14th Amendment does _not_ apply here. Uncle Sam can write as many IOU notes saying “I owe Uncle Sam one billion dollars, signed Uncle Sam.” and it is complete financial malarkey. A note from an entity to itself is just a worthless piece of paper. It is _not_ an asset, it is _not_ a debt. It’s just political shenanigans. It is astonishing how many people fall for this stupid trick. That is incorrect. The paper issued is a debt of the United States. Those are constitutionally guaranteed. The 14th Amendment doesn’t make an exception for one arm of the government holding lawfully issued debt to another arm of the government. It isn’t a stupid trick, it’s the law. And it is pretty straightforward. ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [December 15, 2016, 7:35pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/39 "2016-12-15T19:35:39Z")
> [@CurtC](#): > > Sorry, Jinx, your money is gone, and the benefits you get will come from those who will be paying in at that time. > [@LSLGuy](#): > > Was **Jinx** ’s money saved? Why are you talking about **Jinx**? ---
**Author:** ![Colibri](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/colibri/32/1841_2.png) [@Colibri](https://boards.straightdope.com/u/Colibri)\ **Post date:** [December 15, 2016, 7:48pm UTC](https://boards.straightdope.com/t/income-allowed-with-social-security/774645/40 "2016-12-15T19:48:32Z")
> [@Jonathan\_Chance](#): > > It really comes down to how you define what you do. If you get a W2 you’re sure going to trigger it. A 1099 may or may not depending on how your accountant sets up your return. I get a 1099, not a W2. There’s no withholding. > [@Jonathan\_Chance](#): > > During your FRA year it’s $41,880 with a penalty of $1 for every $3 above the cap. I won’t go over that before my birthday (or can set up my invoices so I don’t), so I should be in the clear. > [@Really\_Not\_All\_That\_Bright](#): > > No. Net self-employment income is treated identically to wages or salary from an employer for the purposes of SS benefit reduction. I defer to **JC** on how earnings in your retirement year affect your benefits. [Previous page](https://boards.straightdope.com/t/income-allowed-with-social-security/774645.md?page=1) [Next page](https://boards.straightdope.com/t/income-allowed-with-social-security/774645.md?page=3)