Social Security Benefits and Working Text Size:

There are three basic requirements for Social Security benefits. First, a person must file a written application with their district office or local representative. Second, the applicant must be fully insured, which simply means that the person has worked for the required number of quarters. If you ere born after January 2, 1929, your requirement for full insurance is 40 quarters, or 10 years. The third requirement is to be of a certain age, 62 years of age or older. The Social Security Administration has regulations stating what is preferred proof of age.

Working While Receiving Social Security Benefits

We all know that living off of Social Security benefits may not yield a decent standard of living. For this reason, a person is allowed to work and earn a certain amount of money while receiving benefits without a reduction of benefits. The amount allowable is based on the age the person attained prior to receiving benefits. In addition, once the person reaches 70 years of age, there is no decrease in benefits regardless of how much the person earns.

Defining Earnings

Earnings are defined for the purpose of calculating any decrease in benefits as wages, for services rendered in a tax year, net earnings from self-employment and net losses from self-employment. In addition, payments made under a set plan of the employer providing medical or hospitalization expenses, or death or retirement for disability are not counted as wages, and reduced benefits should not result. Further, stock dividends are not included in wages, and earnings that resulted from work in prior years is not included in wages. As an example, if a retired insurance agent receives policy renewal income from policies that he or she sold years ago, those payments are not considered wages.

Income Shifting

Sometimes, a retiree may rearrange his work habits in order to reduce his amount of income to avoid a reduction in benefits. This is not allowed. As an example, a husband and wife own and operate a small business. If the husband is older and eligible for Social Security benefits, the couple will be motivated to shift business income from the husband to the wife to avoid a decrease in benefits. The Social Security Administration and the Social Security Commissioner could challenge this scheme and a court will be allowed to review the transactions and decide whether the couple has really changed their business operation or whether they are trying to avoid a reduction of benefits.

The Grace Year

The grace year refers to the first year of eligibility. If a person becomes eligible for Social Security benefits during a year, the person only needs to have one eligible month in order to claim that year as their grace year. What this means is that if you earn more than the amount allowable for your age and your retirement date prior to your retirement and application for Social Security benefits your wages are exempt from penalty for that year if you have one month of benefit eligibility during that year.

How a Lawyer Can Help

Social Security law is a complex maze, with subtle twists and turns that may require a lawyer's skill. At this time in your life there is a lot at stake. One thing to remember is that until 1996, the Social Security Administration was within the Department of Health and Human Services. Some phone books may still list the Social Security Administration under that department, and some may list it under its own heading.

Questions for Your Attorney

• How much can I earn without having my Social Security benefits reduced?
• How do I structure my family business so that I won't fall into an income shifting situation if my spouse is still working in the business and I don't want to have problems with my Social Security benefits?
• As soon as I turn 70, do the Social Security rules regarding working and benefits no longer apply to me?

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