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. Don D.

    I am 63 and I have health issues that affect my balance. I want to retire before this becomes an issue at work. Should I apply for retirement benefits or apply for SSDI?

    • Vonda

      Hi Don, thanks for using our blog. If you are under your full retirement age, you can apply for both Social Security retirement and disability using the same online retirement application. One of the first questions in the application path will ask you if you have been unable to work because of a disabling condition. You can choose to receive reduced retirement benefits while your disability application is pending a medical decision.

      If you have additional questions, 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. David W.

    I’ve been retired for almost a year. Want to start drawing SS benefits at 66 and 2 months. When can I apply to start drawing?

    • Vonda

      Hi David, thanks for using our blog. The minimum age for Social Security retirement benefits is 62. To begin receiving reduced retirement benefits at 62, you are required to be age 62 for the entire month. For SSA purposes, individuals born on the first or second day of the month are considered age 62 for the “full” month and could be entitled to benefits for the month of their 62nd birthday. However, if born on the 3rd or later, you must wait a month. For example, if you’re 62 on May 30, you’re eligible for Social Security retirement benefits beginning in June. Social Security benefits are paid the month after they are due. So, if benefits began in June, you would receive your first benefit payment in July. 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.

      Our system is set up to take applications four months in advance, and when you’re ready, you can apply for your retirement benefits online.

      If you are unable or would rather not apply online, you can call us at 1-800-772-1213 for assistance 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.

  3. Lester C.

    I am 65 this fall. I’ve been retired since I was 62. I’m currently working again. If I make more than what I am allowed to make, do my benefits stop for the rest of the year, or do they start back up when I quit my job, ( don’t plan to work more than 6 months)? Will it affect my benefits for next year?

    • Vonda

      Hi Lester, thanks for using our blog. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits. The amount you’re allowed to earn while receiving benefits depends on your age. If you attain full retirement age in 2021, the earnings limit is $50,520 but we only count earnings before the month you reach full retirement age. Beginning with the month you reach full retirement age, earnings no longer reduce your benefits, no matter how much you earn. If you’re 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.

      Visit our Receiving Benefits While Working web page for more details.

      To provide us with an earnings estimate, please call and speak to a representative. 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.

  4. Shirley R.

    I just retired on 1/8/21 I am 65 years as of 1/30/21. My last paycheck was on 1/8/21. I just received a payout today for accumulated sick time and vacation time. With the payout and the last paycheck I am over what I-am allotted to make for 2021. Will I be penalized?

  5. CJ

    I have been on Survivors Benefits since I was 55 and my husband passed. Will my benefits change when I turn FRA at 66 and 6 months? If so, must I re-file for benefits?

    • Vonda

      Hi CJ, thanks for using our blog. Your survivors benefits will not change; however, you may want to look into retirement benefits on your own record, if it’s advantageous to do so. You can call your local Social Security office for a retirement estimate. 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.

  6. Christine K.

    Can a person who is not even 62 years old but has the 40 credits, retire from their full time job and collect benefits?

    • Vonda

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

      The Retirement web page provides detailed information about Social Security retirement benefits.

  7. Allison P.

    I collect social security and am now working a temporary full time job. Social Security and Medicare are being deducted from my check. Should they be?

    • Vonda

      Hi Allison, thanks for using our blog. As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings. However, we will check your record every year to see whether the additional earnings you had 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 Frequently Asked Questions web page for additional details related to working while receiving Social Security benefits. We hope this is helpful!

  8. Peter B.

    I am 65 5 months old and recently retired. My wife retired about 10 years ago. I will be collecting a higher monthly amount and know how to calculate my monthly payments. How do I calculate my wife’s ss income. What scale I use? Is it based on the same monthly scale as mine?

    Thank you

    • Sue

      Congratulations on your retirement, Peter, and thanks for your questions. If your wife began receiving retirement benefits on her own work record before her full retirement age, her benefits as your spouse will be reduced. Reduction factors are permanently applied to all benefits she may qualify for, including spouse’s benefits. For more information, check out our Benefits for Your Spouse web page. You may wish to use our online Spouse Calculator to do your own computations. We hope this is helpful.

  9. Dale N.

    I started recieving my social security benefits on Oct. 1st 2020. I quit my job and was employer paid until July 2020 . Will these wages penalize me for 2020?

    • Sue

      Hi, Dale. Thanks for reading our blog and for your question. The wages you received until July 2020 may be considered special payments. If you received them after you retired but they were for work you did before you started getting Social Security benefits, they may not count in the annual earnings limit. (For details, see our How Work Affects Your Benefits pamphlet.) Some special payments include bonuses, accumulated vacation or sick pay, severance pay, back pay, standby pay, sales commissions, and retirement payments. Or, you might get deferred compensation reported on a W-2 form for one year but earned in a previous year.

      For more details, sheck out our fact sheet on Special Payments After Retirement. If you received special payments after retirement, call 1-800-772-1213 or your local Social Security office. Please look for the general inquiry telephone number using the Office Locator. The number may appear under Show Additional Office Information. Please be aware that our call volume and wait times are greater than normal. We hope this information helps.

  10. Wayne M.

    I erroneously reported that I had no insurance coverage when I applied for social security and subsequently was assessed a late enrollment penalty. How do I correct this

    • Vonda

      Hi Wayne, 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.

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