If you work after you start receiving Social Security retirement benefits, your earnings may affect the amount of your benefit check. Your monthly benefit is based on your lifetime earnings. When you become entitled to retirement benefits at age 62, the Social Security Administration calculates your primary insurance amount (PIA), upon which your retirement benefit will be based. Your PIA is recalculated annually if you have any new earnings that might increase your benefit. So if you continue to work after you start receiving retirement benefits, these earnings may increase your PIA and thus your future Social Security retirement benefit.

But working may also cause a reduction in your current benefit. If you've reached full retirement age (65 to 67, depending on when you were born), you don't need to worry about this-- you can earn as much as you want without affecting your Social Security retirement benefit.

If you haven't yet reached full retirement age, $1 in benefits will be withheld for every $2 you earn over the annual earnings limit ($14,160 in 2009). A special rule applies in your first year of Social Security retirement--you'll get your full benefit for any month you earn less than one-twelfth of the annual earnings limit, regardless of how much you earn during the entire year. A higher earnings limit applies in the year you reach full retirement age. If you earn more than this higher limit ($37,680 in 2009), $1 in benefits will be withheld for every $3 you earn over that amount, until the month you reach full retirement age--then you'll get your full benefit no matter how much you earn. (If your current benefit is reduced because of excess earnings, you may be entitled to an upward adjustment in your benefit once you reach full retirement age.)

Not all income reduces your Social Security benefit. In general, Social Security only takes into account wages you've earned as an employee, net earnings from self-employment and other types of work-related income, such as bonuses, commissions, and fees. Pensions, annuities, IRA distributions, and investment income won't reduce your benefit.

Also, keep in mind that working may enable you to put off receiving your Social Security benefit until a later date. In general, the later you begin receiving benefit payments, the greater your benefit will be. Whether delaying the start of Social Security benefits is the right decision for you, however, depends on your personal circumstances.

One last important point to consider: in general, your Social Security benefit won't be subject to federal income tax if that's the only income you receive during the year. But if you work during retirement (or receive any other taxable income or tax-exempt interest), a portion of your benefit may become taxable. IRS Publication 915 has a worksheet that can help you determine whether any part of your Social Security benefit is subject to federal income tax. 

 

There are also other considerations including how it will affect any pensions and healthcare benefits.   For more details on this question, see the full article at www.KeenerFinancial.com. 

But just as public colleges find themselves more in demand than ever by cash-strapped students and employees looking to gain a leg up in the workforce, state budget deficits are forcing many states to reduce their public higher education expenditures, resulting in markedly higher tuition and fees. So far, at least 20 states have made cuts to their public university budgets or are planning large tuition increases. And more states are expected to be in financial peril in 2009, jeopardizing future public higher education expenditures (Source: The Wall Street Journal, October 17, 2008, "State Budget Cuts Push Tuition Higher").

The highest tier private colleges--the Ivies and a few select institutions--have enjoyed record endowment growth over the past few years (not counting the economic downturn) and have translated those gains into increased merit aid awards (which aren't based on financial need) for the best students. Many of these institutions have even gone so far as to offer a free education to students whose families earn up to $150,000 or $200,000 per year.

But go one or two levels below, and many colleges in the second and third tiers aren't in a position to meet all of their students' financial need. These colleges continue to hand out merit aid, but are more selective (and less generous) in their awards. So students at these schools could end up paying more out-of-pocket.

Against this backdrop, the federal government passed the Higher Education Opportunity Act last year. Among other things, the Act will make it easier for students to apply for federal student loans and to research college costs on a new website, www.college.gov.
And in 2009, it will be interesting to see what ideas and policies President Obama, who just finished paying off his own student loans in 2004, brings to the college table.