The Social Security Administration announced late in 2010 that there will be no cost of living increase in Social Security benefits for 2011. The key amounts for 2011 are summarized in the following table.
|Maximum taxable earnings (Social Security tax only)||$106,800|
|Maximum taxable earnings (Medicare tax)||No limit|
|Retirement earnings test exempt amount (for workers under full retirement age)*||$14,160|
Your Social Security retirement benefits are reduced if your earnings exceed a certain level, called a retirement earnings test exempt amount, and if you are under your "normal retirement age" (NRA). NRA, also referred to as "Full Retirement Age," varies from age 65 to age 67 by year of birth. For persons born in 1943-1954, the NRA is 66 years. For people attaining NRA after 2011, the annual exempt amount in 2011 is $14,160, meaning that you can earn up to this amount with no reduction in Social Security retirement benefits. For every $2 earned above this amount, Social Security retirement benefits are reduced by $1. A modified annual earnings test applies in the year a worker attains full retirement age. Social Security benefits are reduced by $1 for every $3 of earnings above a specified amount for each month prior to full retirement age. (This amount is $3,140 for 2011.) Beginning with the month an individual attains full retirement age, no reduction in Social Security retirement benefits occurs, no matter how much the person earns.