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Collecting Social Security while working in retirement

Dear Dr. Don,
I am 65 and a half. I am working full-time. Can I collect my full Social Security now even though I am working, or if I take my Social Security now will they hold money back because I make too much? I make over $70,000 a year.
Falean Fundsource

Dear Falean,
According to the Social Security Web site, "Once you reach full retirement age (65 for people born before 1938), there is no limit on the amount you can earn while collecting Social Security benefits. Before age 65, your payments may be reduced depending on the amount you earn."

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With your level of income outside of Social Security, 85 percent of your Social Security income will be treated as taxable income. At lower income levels, the percentage of Social Security income treated as taxable income would be as low as 50 percent.

IRS Publication 554, Older Americans' Tax Guide, provides a worksheet that helps you determine how your Social Security income will be taxed.

Working and collecting Social Security benefits may even cause your benefits to increase since benefits are based on your highest earnings years. For all the details on working and collecting retirement benefits, see the electronic leaflet "How Work Affects Your Benefits" on the Social Security Web site.

-- Posted: April 22, 2004

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See Also
Taxes and your Social Security benefits
Some Social Security benefits may be taxable
Financial advice glossary
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