How the Rules Work for You

Retirement doesn’t have the same meaning for everyone. Some people plan to retire and never work again. Some people plan for second careers in occupations that wouldn’t have adequately supported their families, but they do the work for pure enjoyment. Some people, whether by design or desire, choose to work part-time or seasonally to supplement their retirement income.

Retirees (or survivors) who choose to receive Social Security benefits before they reach full retirement age (FRA) and continue to work have an earnings limit. In 2017, the annual earnings limit was $16,920 for those under FRA the entire calendar year. In 2018, it is $17,040. If you earn over the limit, we deduct $1 from your Social Security monthly benefit payment for every $2 you earn above the annual limit. 

In the calendar year you reach FRA, which you can check out on our website, you have a higher earnings limit. Additionally, we will only count earnings for the months prior to FRA. In 2017, the limit was $44,880. In 2018, it is $45,360. In the year of FRA attainment, Social Security deducts $1 in benefits for every $3 you earn above the limit.

There is a special rule that usually only applies in your first year of receiving retirement benefits. If you earn more than the annual earnings limit, you may still receive a full Social Security payment for each month you earn less than a monthly limit. In 2018, the monthly limit is $1,420 for those who are below FRA the entire calendar year. The 2018 monthly limit increases to $3,780 in the year of FRA attainment.

Once you reach FRA, you no longer have an earnings limit, and we may recalculate your benefit to credit you for any months we withheld your benefits due to excess earnings. This is because your monthly benefit amount is calculated based on a reduction for each month you receive it before your FRA. So, if you originally filed for benefits 12 months before your FRA, but earned over the limit and had two months of Social Security benefits withheld, we will adjust your ongoing monthly benefit amount to reflect that you received 10 months of benefits before your FRA, and not 12.

Most people understand that if they work while receiving benefits before FRA, their benefit may be reduced. What most people do not consider in their retirement planning is that we recalculate your Social Security monthly benefit at FRA to credit you for Social Security benefit payments withheld due to earnings over the limit. Explaining the earnings limit is another way that Social Security helps secure your today and tomorrow. Understanding both the earnings limit and the possible recalculation of your ongoing Social Security benefits will provide an additional perspective on retirement for you to consider.

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222 thoughts on “How the Rules Work for You

  1. I am 63 and have been collecting SS benefits since 62. I just started a job (63.5) and have a PERA DB mandatory deduction. At what point if any does my SS get reduced due to any PERA payment I receive? I will receive approximately $485 a month from PERA (at 65). I understand that my SS benefit will be reduced until FRA and then recalculated so I get those reductions back but unsure about what role any payment from PERA has..
    Thansk

  2. Hello. SS site does not recognize my account sign in & will not allow new set-up because it does. Catch-22 ? Please advise how to affect refresh (?) . Thank You.

  3. I retired in 2009 at 62 years old and have been offered work at the same office from which I retired under professional services on a part time basis. Do I need to pay Social Security on my earnings? If so, how is this done?

  4. I turn 66 on June 10, 2020 which is my FRA. I started working on May 12, 2020. Is that going to affect my Social Security payments at all? I am collecting Social Security now.

    Thank You,
    Debra Keibler

    • Hi, Debra. Thanks for your question. If you retire mid-year, we count your earnings for the entire year. We have a special earnings test rule that we apply to annual earnings—usually the first year of retirement. For more information on the Special Earnings Limit Rule, visit here. When you apply for retirement, let us know if you plan to continue working. Check out how work affects Social Security payments here. We hope this helps!

  5. I started my benefits in April. My first payment was May 2020. I have continued to work 3 days a week. How much am I able to make for total year? Does the months before I filed matter? I had some health issues so decided to retire a little early.65yrs + 4 months. Thank you for you time. Barbara C Kretz

    • Hi Chris, thanks for your question. It really depends on your age. If you attain full retirement age in 2020, the limit on your earnings is $48,600 but we only count earnings before the month you reach full retirement age. Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.

      If you are under full retirement age for the entire year, then we deduct $1 from benefit payments for every $2 earned above the annual limit. For 2020, that limit is $18,240. There is a special earnings limit rule for those that retire mid-year and have already earned more than the yearly earnings limit.

      The Getting Benefits While Working web page provides more details.

  6. What is the age you have to be and you can work as many hours as you want without getting anything deducted from your social security?

    • Hi Linda, thanks for using our blog. A Social Security retirement benefit is calculated by using your highest 35 years of earnings. If you do not have 35 years of earnings, we will use all of the earnings on your record and factor in an annual total of $0.00 earnings for each of the remaining years.

      Social Security has an online calculator called a Retirement Estimator that provides immediate retirement benefit estimates based on your actual Social Security earnings record. Plus, it also allows you to create “what if” scenarios. You can, for example, change your “stop work” dates or expected future earnings to create and compare different retirement alternatives.

      See our Benefits Planner: Retirement web page for more details.

    • Hi Ann, thank you for your question. Unemployment benefits do not affect or reduce Social Security retirement and disability benefits. State unemployment compensation payments are not wages because they are paid due to unemployment rather than employment. However, income from Social Security may reduce your unemployment compensation. Contact your state unemployment office for information on how your state applies the reduction.

      If you’re receiving Supplemental Security Income (SSI), unemployment insurance benefits are considered unearned income. If you, your spouse, or a child living in your household have any income other than your Supplemental Security Income (SSI) payment, including unemployment insurance benefits, you must tell us.

      To learn more about SSI and how income affects your payment, read What You Need to Know When You Get Supplemental Security Income (SSI).

  7. Hi, when I reach 66 as I retired due to illness at age 62. Will I receive more money at 66 for the two years after I retired ? I heard you actually give those who retire at 62 more money when they turn 66 for the two years after retirement.
    Thank you

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