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Old 12-17-2009, 08:55 AM
 
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This is from How Work Affects Your Benefits

Quote:
Also, if you are self-employed, we consider how much work you do in your business to determine whether you are retired. One way is by looking at the amount of time that you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired; if you work less than 15 hours a month, you are retired. If you work between 15 and 45 hours a month, you will not be considered retired if it is in a job that requires a lot of skill or you are managing a sizable business.
That's in the section titled "Special rule for the first year you retire".

Does that only apply to that section?

I'm asking because I'm self employed and turning 62 in February. Business has been very slow past two years and being able to take some SS would help. I'd earn more than the $14,160 cap, so I wouldn't get the full amount, but it would be a little less than $500 and that would really help.

Also related to that: later on in the same page there is this:

Quote:
Will you receive higher monthly benefits later if benefits are withheld because of work?

Yes. If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.
Does anyone know how they calculate that? For example, let's say that at 62 the full amount was $1420 but because of income I only get $470. After 4 years, I'm 66 and ready for the full amount, which would have been $1800 or so had I never taken anything earlier. How can I calculate what it would be (ignoring inflation, of course) based on the partial benefits in the 4 years previous?
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Old 12-17-2009, 09:22 AM
 
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If you are self employed and earn over $14160.00 annually, your Social Security benefit is subject to deductions, but in the first year you retire, the deduction will only apply to months in which you work over 45 hours. One dollar is deducted for every $2.00 over $14160 through $37680, and $1.00 is deducted for every three dollars earned over $37680.

Benefits are reduced 5/9 of one percent for each month of entitlement before full retirement age. When you reach full retirement age, this reduction is recalculated to eliminate the reduction for any months in which benefits were withheld because of your work and earnings.
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Old 12-17-2009, 01:26 PM
 
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Quote:
Originally Posted by TTTenor View Post
If you are self employed and earn over $14160.00 annually, your Social Security benefit is subject to deductions, but in the first year you retire, the deduction will only apply to months in which you work over 45 hours. One dollar is deducted for every $2.00 over $14160 through $37680, and $1.00 is deducted for every three dollars earned over $37680.

Benefits are reduced 5/9 of one percent for each month of entitlement before full retirement age. When you reach full retirement age, this reduction is recalculated to eliminate the reduction for any months in which benefits were withheld because of your work and earnings.

So if I were getting 40% of the $1421, the benefits at 66 would be reduced by 40% of 5/9 of 1% for every month?

So, if the full benefit at 66 were $1800 (I forget what it actually is and have misfiled my last statement) and I had taken 48 months of 40% benefits, the $1821(that would have been paid at 66 otherwise) would be reduced by appx. 11% ?
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Old 12-17-2009, 01:33 PM
 
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Oh, also: according to that page, you have the reductions wrong. They say:

Quote:
If you are younger than full retirement age during all of 2009, we must deduct $1 from your benefits for each $2 you earned above $14,160.

If you reach full retirement age during 2009, we must deduct $1 from your benefits for each $3 you earn above $37,680 until the month you reach full retirement age.
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Old 12-17-2009, 01:58 PM
 
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I just found this at Social Security (United States) - Wikipedia, the free encyclopedia

Quote:
A worker who starts benefits before normal retirement age has their benefit reduced based on the number of months before normal retirement age they start benefits. This reduction is 5/9 of 1% for each month up to 36 and then 5/12 of 1% for each additional month. This formula gives an 80% benefit at age 62 for a worker with a normal retirement age of 65, a 75% benefit at age 62 for a worker with a normal retirement age of 66, and a 70% benefit at age 62 for a worker with a normal retirement age of 67.
That seems close to what you said. So if I only took 40%, the reduction would go down 60% ?

Does that seem right? So normally there would be a 25% reduction, but if I had only taken 40% on average, it woulf be appx. 10% instead?
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Old 12-17-2009, 06:58 PM
 
Location: SoCal desert
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There's a very good understandable article in Kiplinger's magazine (just delivered yesterday) about this
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Old 12-18-2009, 10:49 AM
 
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Quote:
Originally Posted by pcunix View Post


Does that seem right? So normally there would be a 25% reduction, but if I had only taken 40% on average, it woulf be appx. 10% instead?
I'm not certain what you are asking.

Using your example, if your full benefit is $1800 per month, if your entitlement began at age 62, the amount you would be paid would be 75 percent of that, or $1350 per month.

If you continued working, and your earnings caused you to not receive your benefit for some months, when you attain age 66, the amount payable would be adjusted to eliminate the reduction for the months you were not paid the full $1350. So, if your benefit was originally reduced for 48 months of entitlement before full retirement age, but you were paid for only 24 of those months on account of your work and earnings, when you attain age 66, the reduction would be reduced to about 13.333 (5/9 of one percent multiplied by 24,) and your benefit would be increased to $1560 per month.
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