When exploring the options available with Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI) benefits, and regular Social Security retirement benefits, many people wonder if collecting income while receiving Social Security benefits is an option. And, in the case of SSI that is a means-tested program, how “limited” does “limited income” need to be to still qualify for the program?
As we’ve discussed before, if you are collecting Social Security disability benefits and you reach full retirement age (FRA), your monthly benefits automatically convert to Social Security retirement benefits. But if you earn income in excess of Social Security’s annual earnings limit before you’ve reached FRA, your monthly benefits (disability or retirement) will be reduced until you reach FRA.
The only income that is counted toward the annual earnings limit is income that is earned. For example, wages that you earn by working for someone else or income you earn if you are self-employed are considered. Other forms of income that you do not work for, such as investment income, do not count toward the annual limit. Similarly, pensions, annuities, other government benefits, and capital gains are not factored into calculating the annual earnings limit.
Social Security changes the annual earnings limit each year. In 2019, the limit for those receiving benefits who had not yet reached FRA was $17,640. Simply put, you could earn income up to $17,640 per year (or $1,470 per month) and still receive your full monthly benefits.
If your earnings exceed the $17,640 limit, Social Security applies three different sets of rules to determine by how much your monthly benefits will be reduced. For income received before the time you reach FRA, Social Security deducts $1 for every $2 you earn over the limit. For income received during the year you reach FRA, Social Security deducts $1 for every $3 you earn over the limit. For income received after you reach FRA, Social Security does nothing—you are no longer subject to the annual earnings limit; you can earn as much as you like without incurring any benefits reductions.
How is full retirement age calculated? It changes based on your year of birth. The FRA is age 66 for anyone born between 1943 and 1954. Beginning in 1955, two months are added for every birth year until the FRA reaches age 67 for people born in 1960 or later.
Like other Social Security benefits, Supplemental Security Income is heavily impacted by income considerations, since it is a means-tested program. That means that, on top of needing to meet the medical eligibility criteria, you must also meet income eligibility criteria to qualify for monthly benefits because the program is designed to supplement an individual’s income to enable survival with the basic necessities.