How much can I can earn annually without reducing my Social Security benefits?

Question from Dave:

I will reach full retirement age (66) in just over five years. My employer says he would like me to stay on as a part-time employee. The work is fairly easy (not exactly digging ditches) and I've been doing it 42 years, and I don't mind staying on part-time as long as I can. What I want to know is: What is the most money I can earn annually without reducing my Social Security benefits?

Response from Alan:

The amounts in the two-part "Retirement Test" change yearly, increasing to keep pace with inflation, so I can't give you exact amounts for future years.  But here's a quote from SSA's website that explains the amounts for 2008:

• 
  If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.
  
  For 2008, that limit is $13,560.
• 
  
  
  In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit, but we only count earnings before the month you reach your full retirement age.
  
  If you will reach full retirement age in 2008, the limit on your earnings for the months before full retirement age is $36,120
  (If you were born in 1943, your full retirement age is 66 years.)
• 
  
  
  Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.

May 8, 2008