Gray Power: Formula for balancing salaries and social security benefits

Ever wonder how your salary will effect social security benefits?

If you were born Jan.2, 1942, through Jan. 1, 1943, your full retirement age for retirement insurance benefits is 65 years and 10 months.

If you work and are full retirement age or older, you may keep all of your benefits, no matter how much you earn. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.

If you are younger than full retirement age during all of 2007, we must deduct $1 from your benefits for each $2 you earned above $12,960.

If you attain full retirement age during 2007, we must deduct $1 from your benefits for each $3 you earn above $34,440 until the month you attain full retirement age.

These examples show how the rules would affect you:

Let us say that you begin receiving Social Security benefits at age 62 in January 2007 and your payment is $600 per month ($7,200 for the year). During the year, you work and earn $20,480 ($7,520 above the $12,960 limit). We would withhold $3,760 of your Social Security benefits ($1 for every $2 you earn over the limit), but you would still receive $3,440 in benefits.

Or, let us say you were not yet full retirement age at the beginning of the year, but reach it in November 2007. You earned $36,000 in the 10 months from January through October. During this period, we would withhold $520 ($1 for every $3 you earn above the $34,440 limit). You would still receive $5,480 of your Social Security benefits for the first 10 months.

And, starting in November (when you reach full retirement age), you would receive your full benefits, no matter how much you earn.

Marvin Copes, located in Maylene, is an Education and Community Service Volunteer for AARP Alabama. He can be reached by e-mail at mailto:mlcopes@charter.net