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RETIREMENT
JUNE 1, 2018

Can I Still Work If I'm Claiming Social Security Benefits?

Answered by
Ben Storey
Director of Retirement & Personal Wealth Solutions
Yes, absolutely — work and collect Social Security benefits at the same time. But if you're working and collecting benefits before you've reached full retirement age — which is between ages 66 and 67, depending on the year of your birth — your monthly benefits may be subject to a reduction if your income exceeds a prescribed limit. After you reach full retirement age, your benefits will no longer be subject to any reduction while you're employed, and there is no limit on how much you can earn.

Here's how to calculate how your earnings impact your Social Security benefits:

  1. If you're under your full retirement age for the entire year, for every $2 you earn above an annual income limit set by the Social Security Administration ($17,040 or $1,420 per month in 2018), $1 will be deducted from your Social Security benefits.
  2. In the year you reach full retirement age, the government deducts $1 from your benefits for every $3 you earn above a different limit ($45,360 or $3,780 per month in 2018), until the month you reach full retirement age.
  3. Once you reach full retirement age, you can collect full benefits while continuing to work.
Chart illustrating facts in list above
"Keep in mind that the amount by which your Social Security benefit is reduced depends on the type of earnings you have," says Ben Storey, a director of Retirement & Personal Wealth Solutions at Bank of America Merrill Lynch. If you're self-employed, the government counts only your net earnings from that work. If you work for an employer, only your wages are included in Social Security calculations. Pensions, annuities, investments and other government benefits do not count as earnings.

Will my Social Security benefits be taxed differently if I work?

Working while collecting Social Security can affect your taxable income. Taxes on Social Security retirement benefits are based on what is commonly referred to as your "provisional income," a figure the IRS calculates by adding up your adjusted gross income, any tax-free interest you may have earned and 50% of your Social Security benefits. There are some strategies that can help you minimize taxes on your Social Security benefits, although, these too can change based on your age.
Graphic showing provisional income as equation
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Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan account from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. Visit http://www.merrilledge.com/retirement/rollover-ira or call a Merrill Edge® rollover specialist at 888.637.3343 for more information about your choices.
This material should be regarded as general information on Social Security considerations and is not intended to provide specific social security advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.

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