The law that determines what happens when you work and get benefits at the same time was changed, effective January 2000. This change in law applies to widow(er)s as well as retired workers. While you're working, your benefit amount will be reduced only until you reach your full retirement age. Full retirement age for earnings test purposes is currently age 65 and 8 months for persons born 1/2/41 through 1/1/42. Social Security will use this formula to determine how much your benefit must be reduced:

• If you are under full retirement age when you start getting your Social Security payments, $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2007 that limit is $12,960; for 2006, it is $12,480.
• In the year you reach your full retirement age $1 in benefits will be deducted for each $3 you earn above a different limit. In that year, Social Security only counts earnings before the month you reach your full benefit retirement age. For 2007, this other limit is $34,440; for 2006, it is $33,420.
• Starting with the month you reach full retirement age you will get your benefits with NO limit on your earnings.

For information on the earnings limits for prior years, see Exempt Amounts Under the Earnings Test.

Please Note: Earned income is defined as income from wages or net earnings from self-employment. Pensions, 401K distributions, dividends, interest, and IRA distributions are NOT earned income.