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Question: How are retirement benefits figured, and do I get less in benefits if I stop working while I am in my fifties?

Answer: Your retirement age is the age at which you begin receiving Social Security retirement benefits. Your stop work age is the age at which you leave the labor force and no longer work. It can affect the amount of your Social Security retirement benefits. Your retirement benefit is based on your highest 35 years of earnings and your age when you start receiving benefits. If you stop work before you have 35 years of earnings, we use a zero for each year without earnings when we do our calculations to determine the amount of retirement benefits you are due. Even if you have 35 years of earnings, some of those years may be low earnings years. Those low earnings years will be averaged in, creating a lower benefit than if you had continued to work. You can retire before reaching full retirement age and receive reduced benefits. The earliest age you can start receiving retirement benefits is age 62. If you retire when you reach full retirement age, you will receive full retirement benefits. If you choose to work beyond your full retirement age, you have two options. You can work and get full retirement benefits no matter how much you earn, or you can delay getting retirement benefits as late as age 70 and receive credits that increase your benefit amount. You can find our more by visiting www.socialsecurity.gov.

Question: What income counts toward the earnings test limit?

Answer: For purposes of determining whether Social Security benefits are payable, a person’s earnings for a taxable year are the sum of pay for services as an employee plus all net earnings from self-employment (minus any net loss from self-employment) for that year. Wages for Social Security purposes are gross wages - wages before any payroll deductions for income tax, Social Security tax, dues, insurance, or other deductions by the employer. We use gross wages as the basis for Social Security credit and for determining whether benefits must be withheld because of earnings. Non-work sources of income do not count as wages for the earnings test. This includes inheritance payments, pensions, income from investments, IRA distributions, interest, 401(k) distrubutions, or other sources. More information may be found in our publication called "How Work Affects Your Benefits," which is available at www.socialsecurity.gov/pubs/10069.html.

Oscar Garcia is a Public Affairs Specialist with the Social Security Administration. You can direct your questions to him at: SSA, 411 Richland Hills Drive, San Antonio, Texas, 78245. You can also email him at Oscar.h.garcia@ssa.gov.