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. Cindy

    I started receiving SSA benefits at 62 now 64. My husband started his SSA benefits last year. The additional $1000 a month has made us ineligible for HIP insurance. Trying to find other health insurance but will have to pay more than the extra $1000 a month. Are you able to stop SSA benefits after you begin receiving?

    • Vonda

      Hi Cindy, thanks for using our blog. If you apply for Social Security benefits and you change your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date. However, if you change your mind 12 months or more after you became entitled to retirement benefits, you cannot withdraw your application. Also, keep in mind that you must repay all the benefits that you and your family received. For more information, go to our web page Withdrawing your Social Security Retirement Application. We hope this is helpful.

  2. Lisa R.

    Hello,
    I started drawing my social security when I turned 62. I will be 67 in February 2021. Will my monthly benefit increase since I will be FRA?
    Thank you!
    Lisa R

    • Vonda

      Hi Lisa, thanks for using our blog. The benefit reduction is usually permanent with some exceptions due to work. When you reach full retirement age, we will recalculate your benefit amount to leave out the months when we reduced or withheld benefits due to your excess earnings. In addition, each year we review your work record. If your earnings for the prior year are higher than one of the years we used to compute your retirement benefit, we will recalculate your benefit amount. We pay the increase retroactive to January the year after you earned the month.

  3. Susan B.

    I paid Social Security for 16 years when I was younger. I have now been working as a teacher for 18 years and contributing to PERA. I plan to retire at age 66 1/2. I was told recently that unless I go back and work paying social security for a substantial amount of time, I will receive much less than the statement says. I already know I will receive up to 498 less with the Windfall info. but I am wondering about having to change jobs so as to contribute again to soc. sec.

  4. Robert M.

    I’ve filled out my application for retirement benefits, including all the information about my wife, who is already collecting her own benefits. Her spousal benefits will be higher than what she is collecting now. Does she need to apply for anything to get the higher spousal benefits, or will that be automatic based on my application?

    • Vonda

      Hi Robert, thanks for using our blog. 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.

  5. Robert M.

    I turn 70 in late March 2021. Should I enter March 2021 or April 2021 as “when to start benefits”?

  6. John A.

    I plan to retire on my 65 birthday in May 2021.
    I am working now. Do I have a limit for the amount I can make between Jan 2021 and the month I retire?

    • Vonda

      Hi John, thanks for using our blog. 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 2021, that limit is $18,960. There is a special earnings limit rule for those that retire mid-year and have already earned more than the yearly earnings limit. The special rule lets us pay a Social Security check for any whole month your earnings are $1,580 or less and you did not perform substantial services in self-employment, regardless of your yearly earnings.

      The Getting Benefits While Working web page provides more details.

      You may also find our Retirement Earnings Test Calculator helpful.

    • Linda W.

      Hi John, are these rules changing for 2022? If I retire Feb 1 2022 at age 62, and I will have earned more than the monthly limit in January, will I receive SS checks for Feb-Dec 2022? Thank you.

  7. Klais S.

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  8. Karie R.

    I am only 60 years of age my retirement age is 67. Due to my parents failing health I am having to retire to take care of them fulltime. What is the soonest I would be able to collect SS benefits?

    • Vonda

      Hi Karie, thanks for using our blog. You may start receiving Social Security retirement benefits as early as age 62 or as late as age 70. Monthly benefits are reduced if you start them any time before your “full retirement age”. Your full retirement age depends on your date of birth. It may be between age 66 and 67. This could affect the amount of your benefits and when you want the benefits to start.

      Check out the Retirement section of our website to help you better understand the program, the application process, and the online tools and resources available to you.

  9. Mike M.

    I have a question regarding the earnings limit.
    I am thinking about requesting SS and I will be 64 yrs and 8 months.
    My wife has her own small business on our property. They write a rent payment addressed to me. The yearly amount adds up to $32,400.
    Does this rent count against my income?

    • Vonda

      Thank you for the question, Mike. When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you’re self-employed. We include bonuses, commissions, and vacation pay. We don’t count pensions, annuities, investment income, interest, veterans, or other government or military retirement benefits.

      After you retire, you may receive payments for work you did before you started getting Social Security benefits. Usually, those payments will not affect your Social Security benefit if they are for work done before you retired. Check out our factsheet Special Payments After Retirement for more details.

  10. Sandy

    I am turning 70 in October 2021 and want to start collecting my retirement. How soon prior to October do I apply and how do I apply.

    • Vonda

      Hi Sandy, thanks for using our blog to ask your question. 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.

      If you need further assistance, call us at 1-800-772-1213 or you can contact 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.

Comments are closed.