Social Security Earnings Limits Modified

On April 7, 2000, President Clinton signed the "Senior Citizens' Freedom To Work Act of 2000," retroactive to January 1, 2000. The "retirement earnings test" has been ELIMINATED for individuals ages 65 through 69. However, it remains in effect for those ages 62 through 64. Individuals who reach "retirement age" (65 or older) can now have "unlimited earnings" and their social security benefits will NOT be reduced.

Under the old law, the "retirement earnings test" did NOT apply if you were age 70 or older. This meant that you could have "unlimited earnings" and your social security benefits would NOT be reduced. However, if you were UNDER age 70 and exceeded the "retirement earnings test," your social security benefits would be reduced.

Retirement Age

As stated above the old law for "unlimited earnings" was "age 70." However, the new law changes "age 70" to "retirement age."

Retirement age is defined as the age a taxpayer can receive FULL social security benefits. For those taxpayers who reached age 65 before January 1, 2003, retirement age is 65. If the taxpayer did NOT reach age 65 by January 1, 2003, then "retirement age" depends on when the person was born. The modified test applies ONLY to taxpayers who did NOT reach age 65 by January 1, 2003.

The table below will determine a taxpayer's "retirement age" to receive FULL benefits and NOT be subject to the "retirement earnings test":

Social Security Benefits and Earnings

Social Security recipients who are UNDER full retirement age can earn up to the following amounts and NOT have any of their Social Security benefits reduced:

• $11,520 in year 2003

• $11,640 in year 2004

• $12,000 in year 2005

• $12,480 in year 2006

• $12,960 in year 2007

Social Security recipients who REACH full retirement age can earn up to the following amounts and NOT have any of their Social Security benefits reduced:

• $30,720 in year 2003

• $31,080 in year 2004

• $31,800 in year 2005

• $33,240 in year 2006

• $33,440 in year 2007

NOTE: Only count earnings BEFORE the month you reach full retirement age. Beginning with the month you reach full retirement age, you will receive Social Security benefits with NO limit on earnings.

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