Q If you are 62 years old and working and collecting Social Security, and also collecting a separate pension, and you go over the $11,520 allowed, does the separate pension count as part of that $11,520 for the payback of $1 for every $2 you earn? … Some say it counts, some say it doesn’t count. …

-B.S., Greenville, R.I.

A. It doesn’t count, said Kurt Czarnowski, regional communications director for the Social Security Administration. Here’s the deal:

If you start receiving Social Security retirement benefits early (before you reach full retirement age), you may continue working, too.

However, once your earnings from work exceed a certain dollar amount, you must forfeit a portion of the benefits you receive.

This year, the limit is $11,520, or $960 a month. What happens then? In general, if you’re under full retirement age when you begin drawing Social Security retirement benefits, you’ll have to forfeit $1 in benefits for every $2 you earn above that dollar limit.

For example, if you’re between 62 and 64, drawing Social Security retirement benefits and earn $13,520 this year, you’ll have to give up $1,000 in Social Security benefits. Why? You’ll have earned $2,000 over the $11,520 limit, and you must give up $1 in Social Security benefits for every $2 you earn above that limit.

So the key question is, what counts as earnings? That’s one of the most frequently asked questions the Social Security Administration receives, Czarnowski said.

“All we’re looking at is earnings, meaning wages or net income from self-employment,” he said. So, for purposes of this test, “earnings” generally means money you get for working – money you earn from a job.

But it does not include such items as private pensions, veterans’ benefits, interest or dividends, he said. It also does not include income from annuities, or profits from the sale of stock or other assets, a Social Security Administration booklet points out.

Keep in mind that the rules are relaxed a bit for the year in which you reach full retirement age.

In general, full retirement age is the point at which you qualify for full Social Security benefits. This year, you reach full retirement age at 65 and 2 months. (The full retirement age will gradually increase over time, to age 67 for those born in 1960 and later years.)

And remember: Starting with the month you reach full retirement age, you’re all set; no such retirement earnings test applies after that, so you can work as much as you want without worrying about whether you’ll have to forfeit benefits.

TODAY’S TIP: The Social Security “earnings test” summarized here has lots of rules and other details, more than I can list. For more information, get a copy of “Social Security: How Work Affects Your Benefits,” a booklet published by the Social Security Administration.

For your free copy, visit your local Social Security office, call the agency toll-free at (800) 772-1213, or download a copy from the agency’s Web site: www.socialsecurity.gov.

Neil Downing is a Providence Journal staff writer.

and author of ” The New IRAs and How to Make Them Work for You.”

If you have questions about your money matters, call us at 1-401-277-7484 or 1-888-697-7656 and leave a message. (When calling toll-free, please ask for ext. 7484.) We can’t reply personally; as many questions and issues as possible will be addressed in this column.)

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