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A number of factors, including the economy and older workers’ desire to not bail out of the workforce entirely, has made retiree restaffing an emerging trend. This series examines the trend and provides ways that recruiters can take advantage of it.

One of the biggest concerns retirees may have when deciding whether to return to work is how doing so may affect their Social Security Benefits. They can rest assured that while contracting may temporarily reduce the benefits they receive on a monthly basis, it will not reduce the total value of their lifetime benefits and may even increase them!

There are two possible scenarios: the retiree has reached full retirement age or they are under the full retirement age. Those born between January 2, 1943, and January 1, 1955, will be eligible for full retirement at age 66. To see other full retirement ages, go to www.socialsecurity.gov/retire2/agereduction.htm.

At full retirement age, contractors can make as much as they want and still receive their full Social Security benefit payments. If they are under their full-time retirement age, there is a limit on how much contractors can earn. Their Social Security benefits will be reduced by $1 for each $2 they earn above the limit of $14,160.

While those who have not yet attained full retirement age may temporarily see a reduction in their benefits, they may experience an overall increase in the value of their lifetime benefits. Why? Well first of all, when you reach full retirement age, the Social Security Administration will give you credit for any months in which you did not receive your full benefits due to your earnings by increasing your monthly benefits at that time. Secondly, the amount you earned while working and receiving Social Security benefits may also raise your monthly benefit.

More information about working while receiving Social Security benefits and how certain circumstances are handled is available from the Social Security Administration at http://ssa.gov/pubs/10069.html.

The bottom line? Working on a contract basis will not hurt retirees’ Social Security benefits and may even increase them in the long-term!

DISCLAIMER: This post is intended to give only general information and should not be construed as financial or legal advice.

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