For many individuals over the age of 62, Social Security Income (SSI) Benefits can be a major component of their income stream, particularly during retirement years. Below is a summary of key points regarding this benefit.
Full Retirement Age (FRA) and Impact on Benefit
| Year of birth | Full retirement age |
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 |
67 |
You can begin receiving benefits as early as age 62, but your benefit will be reduced using a formula based on your FRA. For example, if you turn 62 in 2024 , your benefit would be about 30% less than it would be at your FRA of 67.
For more information on benefit reduction for early retirement, click here.
Working While Receiving Benefits
If you are younger than FRA and earn more than the yearly earnings limit, your benefit will be reduced as follows:
- If you are under FRA for the entire year your benefit will be reduced by $1 for every $2 you earn above $22,320 (tax year 2024)
- In the year you reach FRA, your benefit will be reduced by $1 for every $3 you earn above $59,520 (tax year 2024). This calculation includes earnings only up to the month before you reach FRA, not the entire year.
“Earned Income” for this calculation includes wages (if you work for someone else) and net earnings (if you are self-employed).
- Employed – Income counts when it is earned (not paid). Accumulated sick or vacation pay earned in previous years are considered “special wage payments” and are not applied towards the yearly earnings limit.
- Self-Employed – Income counts when you receive it.
For more information on how working affects your SSI benefits, click here.
Federal Income Taxes
Only a portion of SSI benefits (between 0% and 85%) are subject to federal income tax. The taxable income portion is based on a person’s filing status and their “combined income”. Combined income is a total of Adjusted Gross Income (AGI), nontaxable interest, and ½ of Social Security Income.
| Portion of SSI that is taxable | Combined Income (Single Filer) | Combined Income (MFJ) |
| 0% | < $25,000 | < $32,000 |
| 50% | $25,000-$34,000 | $32,000-$44,000 |
| 85% | $34,000+ | $44,000+ |
Federal income tax can be withheld from SSI using this form.
State Taxes
State tax law can be different than federal law, so it is important to review your state’s tax code. Most states, including Wisconsin, do not tax SSI benefits.
Applying for Benefits
Applying for benefits can be done on-line or by making an appointment at a Social Security office. To prepare for the on-line application, the Social Security Administration provides a checklist to assist with gathering the relevant documents.
Checklist for Online Application
When to Apply
You can apply up to four months before you’d like to start receiving benefits. Generally, SSI benefits can begin as early as 62. Even if you aren’t retiring, you should apply for Medicare three months before your 65th birthday.
Revocation of Application
If you change your mind about receiving benefits, you may be able to withdraw your Social Security claim if it has been less than 12 months since you were first entitled to benefits. To withdraw your claim, you must meet all of the requirements, including making the request in writing and repaying the benefits that you received.