Under the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

social security Welfare spending is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance ...

system, workers who have reached 62 but have not yet reached the full social security

retirement age This article lists the statutory retirement age in different countries. In some contexts, the retirement age is the age at which a person is expected or required to cease work. It is usually the age at which such a person may be entitled to recei ...

are subject to a retirement earnings test, which effectively defers benefits for people whose earnings are above a given threshold.

Applicability

The test only applies to people who are below the normal retirement age, which ranges from 65 to 67 years old, depending on the person's year of birth. For beneficiaries working before the

calendar year A calendar year begins on the New Year's Day of the given calendar system and ends on the day before the following New Year's Day, and thus consists of a whole number of days. The Gregorian calendar year, which is in use as civil calendar in ...

in which they reach the Normal Retirement Age, current benefits are reduced by $1 for every $2 in wages over the lower bracket amount. For beneficiaries working in the calendar year they reach the Normal Retirement Age, but before they have turned the Normal Retirement Age, current benefits are reduced by $1 for every $3 in wages for earnings over the upper limit bracket. The earnings test does not apply if a person is at or beyond the normal retirement age, is under the normal retirement age but has disability payments, or is living outside of the United States and working in a job that is not covered by Social Security. The reduction of benefits does not represent a decrease in expected lifetime benefits; it in fact only defers those benefits to later years. When a worker who was subject to the earnings test reaches the Normal Retirement Age, the earnings test no longer applies to him. In addition, monthly benefits are increased to replace those taken by the earnings test. As a result, on average the earnings test has little or no effect on the worker's total lifetime benefits.

Table

The following table determines what bracket people under the Normal Retirement Age fall under spanning several years:

References

{{reflist United States economic policy Retirement in the United States