Retirement

How the Rules Work for You

July 12, 2018 • By

Last Updated: July 12, 2018

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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About the Author

Jim Borland, Acting Deputy Commissioner for Communications

Comments

  1. Janet

    I’m turning 62 in May. When I tried to apply online it wouldn’t let me go any further as it states I have to wait to use the online application at 61 years and 9 months.

    The one page on the SSA site states I can apply at 61 years and 8 months.

    I’m not applying for disability, just early retirement for this year.

    Should I call the 800 number to see what is going on with my information?

    • Vonda

      Hi Janet, thanks for using our blog. You can apply four months before you want your Social Security retirement benefits to start. If you want your benefits to start at age 62, you can apply at age 61 and eight months. You can call us at 1-800-772-1213 for assistance or you can call your local Social Security office. Please look for the general inquiry telephone number at the Social Security Office Locator. The number may appear under Show Additional Office Information. Please be aware that our call wait times are longer than normal. We hope this information helps.

  2. Keith H.

    I want better details regarding the first year rule. Is this monthly test done based on paycheck received weekly, or done from the 1st of month to end. I am not sure how SS will break down what is actual. I am retiring but will continue to work and want to maximize my opportunities. Is it just for current year to end. application or 12 months from my start of benefits?

    • Sue

      Hi, Keith. Thanks for using our blog and for your questions. As you know, there’s a limit on how much you can earn and still receive your full Social Security retirement benefits while working. Some people who file for benefits mid-year have already earned more than the yearly earnings limit amount. We have a special rule for this situation that lets us pay a full Social Security check for any whole month we consider you retired, regardless of your annual earnings.

      If you are younger than full retirement age for all of 2021 and receive Social Security benefits, you are considered retired in any month that your earnings are $1,580 or less and you did not perform substantial services in self-employment. If you work for wages, income counts when it’s earned, not when it’s paid. If you’re self-employed, income counts when you receive it — not when you earn it — unless it’s paid in a year after you become entitled to Social Security and earned before you became entitled.

      For more information, including an example of how the special rule works, please review our How Work Affects Your Benefits pamphlet. We hope this explanation is helpful.

  3. Julie B.

    My FRA is Jan 2022, I am currently collecting SS, BUT my birthday falls on 1st of November 2021 . Right now I work part time but I would like a chance to make more monies in 2021. Since my birthday is on the 1st of November, can I make the $50,000 for 2021 or do I only have to make the $18,960?

    According to your website:

    For example, someone born on Jan. 1, 1956, would use 1955 as the year to figure their full retirement age, as they would be considered to have attained an age (in this case, 66) on Dec. 31 of the previous year (1955). According to the Social Security Administration, full retirement age for 1955 as a birth year would be 66 and 2 months, therefore that is their retirement age, even though they were actually born in 1956.

    For purposes of the month you are entitled to receive benefits, if you were born on the first of the month, you are considered to attain that age the month before. Someone born on February 1 would be entitled to receive their FRA benefit amount for the month of January.5

    So, according to above what amount can I make in 2021 ?

    • Sue

      Hi, Julie. Thanks for using our blog and for doing your homework! If your Full Retirement Age is 66 and 2 months, and you turn 66 in November 2021, you would typically attain your Full Retirement Age in January 2022. However, you are the exception because you were born on the 1st of the month. Therefore, we figure your Full Retirement Age as if your birthday was in October 2021.

      As you know, the amount you’re allowed to earn while receiving retirement (or survivors) benefits depends on your age. Due to our first of the month rule, you have a higher earnings limit this year. Since we consider that you attain FRA in 2021, your earnings limit is $50,520. We will deduct $1 from benefits for every $3 earned above the limit. We only count earnings before the month you reach Full Retirement Age. Beginning in December 2021 – because of the first of the month rule – your earnings no longer reduce your benefits, no matter how much you earn. For more details, visit our Receiving Benefits While Working web page.

      To avoid being overpaid or underpaid, please call your local office to let us know how much you intend to earn this year. You’ll find the phone number using the Office Locator. Our call volume and wait times are greater than normal, so please be patient. We hope this explanation is helpful.

  4. James T.

    I am 71 1/2 years old and retiring Jan 15th ,2021 if my employer wants to use me on an hourly bases as needed can I start immediately after retirement or is there a waiting period. I started drawing my social security at age 66 but continued to work full time

    • Vonda

      Hi James, thanks for using our blog. Beginning with the month you reached full retirement age, earnings no longer reduce your benefits, no matter how much you earn. Plus, if you continue to work while receiving retirement benefits, your monthly benefit amount may increase. As long as you continue to work and receive benefits, we will automatically check your record every year to see whether the additional earnings will increase your monthly benefit. If there is an increase, we will send you a letter telling you of your new benefit amount.
      Check out our Receiving Benefits While Working web page for additional details.

  5. Jean

    My FRA is May 2021, do I request my retirement benefits begin in May or June to collect full benefit? Do I apply in Jan. or Feb., given that application should be made 4 months prior to FRA?

    • Vonda

      Hi Jean, thanks for your question. If you wait until your full retirement age, you will get your full benefit. If you turn full retirement age in May, that is the month you will receive the full amount. One exception to that is for individuals that are born on the 1st of the month. We figure their benefit (and their full retirement age) as if their birthday was in the previous month.

      Social Security benefits are paid the month after they are due. So, for instance, if your benefits begin with the month of May, you will receive your first benefit payment in June. The exact payment date is determined by your date of birth. For future pay days, you may find the Schedule of Social Security Payments calendars useful.

      You can apply four months before you want your Social Security retirement benefits to start. Once you’re ready to apply, the easiest way to complete your application is online.

  6. Brenda W.

    I retired at 62 and worked part time, I earned over the limit two years and had to pay back monies. I’m now at full retirement age, how do I get my benefits recalculated to get credit for months I was overpaid and had to return the funds?

    • Vonda

      Hi Brenda, thanks for using our blog. If some of your retirement benefits are withheld because of your earnings, your monthly benefit will increase starting at your full retirement age to take into account those months in which benefits were withheld. The recalculation of your benefits will happen automatically.

      If you have additional questions, you can call us at 1-800-772-1213 for assistance or you can call your local Social Security office. Please look for the general inquiry telephone number at the Social Security Office Locator. The number may appear under Show Additional Office Information. Please be aware that our call wait times are longer than normal. We hope this information helps.

  7. John F.

    If my FRA is March 8th, 2021, can I still continue to work full time?

    • Sue

      Happy New Year, John, and thank you for using our blog. The amount you’re allowed to earn while receiving retirement or survivors benefits depends on your age. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above $50,520 in 2021. We only count your earnings up to the month before you reach your full retirement age, not for the entire year. Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn. For more information, check out our Receiving Benefits While Working web page. We hope this information is helpful.

  8. Lisa D.

    How do I sign up to have taxes deducted from my check?

    • Vonda

      Thank you for your question, Lisa. You can download the form or call the IRS toll-free at 1-800-829-3676 and ask for Form W-4V. When you complete the form, you can choose to have 7, 10, 12, or 22 percent of your monthly benefit withheld for taxes. Mail the completed, signed form to your local Social Security office. Use our Social Security Office Locator to obtain their mailing address.

      Check out our Withholding Income Tax From Your Social Security Benefits web page for more information. We hope this is helpful!

  9. jeanne

    i was 65 in March of 2020…i am still working..but plan it retire in May of 2021..can i still get parts BCand D ??

    • Vonda

      Hi Jeanne, thanks for using our blog to ask your question. You can apply four months before the month you want your Social Security retirement benefits to start. Once you’re ready to apply, the easiest way to complete your application is online.

      If you are covered under a group health plan based on current employment, you may qualify for a Special Enrollment Period (SEP) that will let you sign up for Medicare Part B after age 65. You have an 8-month SEP to sign up for Part A and/or Part B that starts at one of these times (whichever happens first):
      • The month after the employment ends
      • The month after group health plan insurance based on current employment ends.

      Usually, you don’t pay a late enrollment penalty if you sign up during a SEP.

      Check out our Medicare web page for more details.

  10. jeanne

    i’m planning to retire at 66 and 2 months, should that start on the first of the month or the exact dare from my birthday?? 3/16/55..

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