Income Cap Issues for Retirees
There can be many reasonswhy someone who took early retirement may want to re-enter the workforce. Somemight not have liked retirement as much as they expected. Other workers mighthave retired to care for an ill spouse whose health situation has been resolved.It might also be that there are individuals who have irreplaceable skills thatthe employer wants back. New hires or rehires who are receiving Social Securitywill have specific financial needs that the HR department must be prepared toaddress.
Briefly, those workers are penalizedfinancially for earnings over a certain threshold that they make prior to themonth when they reach their full retirement age. According to Lowell Kepke,spokesperson for the Social Security Administration’s office in San Francisco,there are some key facts you need to know:
- Retirement age: “Fullretirement age,” when an individual is qualified for full Social Securitypayment, is on its way up. For people born in 1938, the full retirement ageis 65 years and two months. By the time people born in 1960 are ready toretire, the full retirement age will be 67.
- Deductions: If an employee isunder his “full retirement age” when he begins receiving Social Securitybenefits, $1 of those benefits will be deducted from his Social Securityentitlement for each $2 he earns above the annual limit.
- Limit of Unaffected Income:The annual limit will rise with the cost of living. For the year 2000, itwas $10,080. For this year, it is $10,680. Next year’s limit will beannounced by the Social Security Administration in October.
- Year Employee Reaches FullRetirement Age: The rules are much more complicated for the year theemployee reaches full retirement age. In some respects they are moreliberal. But because of the complexity, Kepke advises people to contact theSocial Security Administration at 800/772-1213, or to talk with theirpersonal financial advisers.
Workforce, February 2001, Vol80, No 2, p. 62 Subscribe Now!