You can work while you receive Social Security retirement (or survivors) benefits. When you do, it could mean a higher benefit for you in the future. Higher benefits can be important to you later in life and increase the future benefit amounts your family and your survivors could receive.

While you are working, your earnings will reduce your benefit amount only until you reach your full retirement age.

Use the formula below to determine how much your benefit must be reduced:

• If you are under full retirement age for the entire year,  deduct $1 from your benefit payments for every $2 you earn above the annual limit.

For 2006, that limit is $12,480.

• In the year you reach full retirement age,  deduct $1 in benefits for every $3 you earn above a different limit, but the Social Security Administration only counts earnings before the month you reach your full retirement age.

If you reach full retirement age in 2006, the limit on your earnings for the months before full retirement age is $33,240.

• Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.

If you are not already receiving benefits, be sure to contact the Social Security Administration at the beginning of the year you reach full retirement age. Even if you are still working, you may be able to receive some or all of your benefits for the months before you reach full retirement age.

You can continue to work and earn above the annual earnings limit and still get some of your benefits.

Here are some examples:

• You begin receiving your Social Security benefits at age 62 in January 2006 and you are entitled to $800 a month ($9,600 for the year).
  

You work and earn $20,480 ($8,000 over the $12,480 limit) during the year. Your Social Security benefits would be reduced by $4,000 ($1 for every $2 over the limit), but you would still receive $5,600 for the year.

• You are age 65 at the beginning of the year but reach full retirement age (currently age 65 and 8 months) in September 2006. Your benefits are $800 per month ($9,600 for the year).
  
  • You earn $60,000 during the year, with $36,450 of it in the 8 months from January through August.
    
    • Your Social Security benefits would be reduced through August by $1,070 ($1 for every $3 of the $3,210 you earned above the $33,240 limit). After we deduct $1,070, you would still receive $5,330 out of your $6,400 benefits for the first 8 months (January through August).
      
    • You would get all $3,200 in benefits for the 4 months after you reached full retirement age (September through December).

Even though you earned $60,000 in 2006, you would still get $8,530 of your Social Security benefits.

• Suppose you earn $81,000 for the year, with $54,000 of this amount earned from January through August. You would
  
  • Not receive any benefits for the first 8 months. ($1 of every $3 of the $20,760 above the $33,240 limit would have to be deducted from your benefits. The $6,920 reduction would be more than the $6,400 in benefits you would receive.)
    
  • Still get $3,200 for the 4 months after you reached full retirement age (September through December).

When the SSA figures out how much to deduct from your benefits, they count only the wages you make from your job or your net profit if you're self-employed. They include bonuses, commissions and vacation pay, but don't count pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.

Note: If you continue to work while you are getting benefits, the SSA will check your record every year to see whether the additional earnings will increase your monthly benefit. If there is an increase, they will send you a notice of your new benefit amount.