As of February 2015, the Social Security monthly benefit gets reduced by a certain percentage based on the year of birth, according to the Social Security Administration. For example, someone who retires at age 62, who is entitled to a full benefit of $1,000 per month, receives $750.
If a taxpayer earns wages above a minimum limit during a calendar year at age 62, he "gives back" $1 for every $2 earned above the $15,480 limit, notes the Social Security Administration. For instance, if a taxpayer earns $23,480 at age 62, Social Security benefits are reduced by $4,000 for the year. Instead of $9,600 in yearly benefits, this taxpayer earns $5,600 per year, or approximately $467 per month.
Half of the total Social Security benefit gets added to wages earned in that tax year to calculate whether any Social Security is subject to income taxes, says Massachusetts Mutual Life Insurance Company. The threshold is $25,000 for a single taxpayer and $32,000 for a married taxpayer filing jointly, as of 2015.
Full retirement age is 66 as of 2015, reports Nancy Anderson for Forbes. If a retiree waits until age 70 to fully retire, the benefit becomes 132 percent of the full payment. In the year a taxpayer reaches 66, the limit increases so a person can earn up to $3,450 per month on top of Social Security, or $1 for $3 earned beyond the minimum limit.