What types of income do not count against your Social Security benefits? Here are the exceptions

Receiving your Social Security benefits does not mean you are prohibited from receiving money from other sources. The extra money can be essential for unforeseen needs or any situation that comes your way.

But you should be very careful, because people who choose to collect benefits before their full retirement age of 67. You can only earn a certain amount each year; if this is not met, you could have some significant reductions in your benefits.

In a practical case, if a person is not age 67, receives $1,000 a month in benefits and earns $22,000 a year in a job, you would be over the $19,560 limit. For every $2 over the limit, $1 in benefits is reduced, so you would lose $1220 in additional earnings. That’s a total of $10,780, which is a big reduction.

Be careful, people who do not reach full retirement age can earn up to $50,000 a year. Once you’re retired, you won’t have a problem with limits and you’ll have freedom.

What income does not count against my Social Security benefits?

1. Dividends: Only earned income, not income from investments, bonuses or savings, counts toward the $23,400 limit that can affect Social Security benefits before full retirement age.
2. IRA distributions: If you take money from your Individual Retirement Account (IRA) to make ends meet, that money does not count toward the $23,400 earnings limit.
3. Pensions: If you receive payments from a pension or retirement plan, that income will not affect the earnings limit for Social Security benefits before you reach your full retirement age of 67.
4. Rental income or property: Do you rent a home? Don’t worry, you won’t have a problem with your benefits, as long as it’s not your real estate job.
5. Inheritances: Gifts and transfers such as inheritances are not considered income for Social Security purposes and are generally not taxed, although it depends on the amount and the state.
6. VA Benefits: Veteran’s benefits don’t reduce your Social Security, so whether you have a disability or not, you shouldn’t have to worry.
7. Royalties: That’s right, if you receive royalties from something you own, those earnings won’t change your Social Security benefits until the year you turn 67.
8. Unemployment: Unemployment does not reduce Social Security benefits before full retirement age, but check how it affects your status as there may be exceptions.
9. Wages: If you earn as an individual and not as a representative of a company, you will not have a problem with your benefits.
10. Pension plans: The funds are exempt from federal income tax, so they should not affect your Social Security income.