Just ask the folks who retired, planning on the easy life with their Social Security benefits and retirement nest eggs. When the economy flopped, many found that nest egg wasn't enough and went back to work. What happens to their Social Security benefits?

There is an earnings test: how much you can earn while getting benefits. For those retired before the normal retirement age, the test starts at $14,160 of earned income; for every $2 earned over that, the individual loses $1 of benefits. At normal retirement age, a person loses $1 of benefits for each $3 earned. At age 70, there is no earning limit. Money lost in reduced benefits will come back in bigger checks later.

The Social Security Administration does not trim each check by a certain amount. Rather, benefits are withheld until the overage is covered (they ask how much you'll make). In the first year, what you earned before you applied for benefits does not count.

Should you apply for Social Security? Did you? Talk over your options with the tax people at G M Hietpas CPA, LLC.