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. barbara d.

    Thank you for taking the time to write to us, https://www.ctsaudepremium.com.br/

  2. Brian B.

    I get paid in arrears. If I stop working on June 30 but get paid for it on July 10th does that count as income in June or July for determining if I pass the earned income threshold of $1560ish? How does that work for accrued sick pay and unused vacation time which I would also be entitled to upon retirement?

    • Vonda

      Hi Brian, 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.

      If you worked for wages, income received after retirement counts as a special payment if the last task you did to earn the payment was completed before you stopped working. Some special payments to employees include bonuses, accumulated vacation or sick pay, severance pay, back pay, standby pay, sales commissions, and retirement payments. Check out our factsheet Special Payments After Retirement for more details.

      The Getting Benefits While Working web page provides more details.

      You may also find our Retirement Earnings Test Calculator helpful.

  3. kent m.

    What about pre 1978 as far as credits go and what if you live out of the country, can you still collect Social Security?

    • Vonda

      Hi Kent, thanks for using our blog. For years before 1978, an individual earned a Quarter of Coverage for any calendar quarter beginning January 1, April 1, July 1, or October 1, in which they earned at least $50 in wages or at least $100 of self-employment income (SEI).

      Our publication, “Your Payments While You Are Outside the United States”, explains how being outside the United States may affect your Social Security payments.

      If you are a U.S. citizen, you may continue to receive payments outside the United States as long as you are eligible for payment and you are in a country where we can send payments. If you aren’t a U.S. citizen, you must meet one of the conditions for payment described in this publication.

      You may use our Payments Abroad Screening Tool to see if your benefits will continue indefinitely, stop after six consecutive months or if certain country specific restrictions apply.

      We recommend that individuals living outside the United States contact the nearest Federal Benefit Unit in the area for any assistance related to Social Security programs and benefits. Also, our Office of International Operations home page provides more information to assist our customers living abroad.

  4. Anonymous p.

    I retired early and began receiving SSA benefits Fall of 2020. I’m planning to accept a temporary position soon. May I suspend my SSA benefits until later?

    • Vonda

      Hi there. 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 Withdrawing Your Social Security Retirement Application web page.

      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. If you anticipate making more than the limit, please call your local Social Security office to provide an estimate. 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. Ranell P.

    What is the 2021 income limit for people working and receiving Social Security. When I applied for Social Security I was 65 and 11 months old. I was told that year from July to Aug I could not make over 45,000. The years after that I could make as much as I wanted without being penalized.

  6. Niraj V.

    If I want to stop working after first 6 months (until June end) and then retire & start taking social security benefits July onwards ( I am below FRA), would me SS benefits be reduced?
    my FRA is 66 6 months
    I would be 64 in August 2020.

  7. Anonymous

    If someone has been a stay at home mom their whole life, and just started working at 50 years old, what age can they retire, and how much will their benefits be, assuming they make $20k/year?

    • Vonda

      Hi there, thank you for the question. The minimum age for Social Security retirement benefits is 62. 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.

      If you have a my Social Security account, you can get an estimate of your personal retirement benefits and see the effects of different retirement age scenarios. You can also view the benefits you could receive based on your spouse’s earnings history, or the benefits your spouse could receive based on your earnings history.

      If you are unable to create an account, you can use our online Retirement Estimator. We hope this is helpful!

  8. Mary K.

    Do people who have never worked outside the home still receive social security?

    • Vonda

      Hi Mary, thanks for using our blog. By law, employers must withhold Social Security taxes from a worker’s paycheck. While usually referred to as “Social Security taxes” on an employee’s pay statement, sometimes the deduction is labeled as “FICA” which stands for Federal Insurance Contributions Act, a reference to the original Social Security Act. In some cases, you will see “OASDI” which stands for Old Age Survivors Disability Insurance. By working and paying Social Security taxes, you are earning credits. The credits you earn will always remain on your Social Security record even if you change jobs or have no earnings for a while.

      The taxes you pay now translate to a lifetime of protection — for retirement in old age or in the event of disability. And when you die, your family (or future family) may be able to receive survivors benefits based on your work as well.

      Check out our Explore The Benefits You May Be Due web page for more details.

  9. Mary K.

    How many years on average does your contribution last before you are relying on other worker’s contributions?

  10. Naomi S.

    If my birthdate is August 29, 30 or 31, does February — only 28 days — still count for the 6th month for full retirement?

    • Vonda

      Hi Naomi, thanks for using our blog. If you wait until your full retirement age, you will get your full benefit. If your full retirement age is 66 and 6 months and you turn 66 in August, you will attain your full retirement age in February (the entire month). 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.

      Your full retirement age is determined by your year of birth. You can check out our Retirement Benefits By Year Of Birth to understand why some people have different full retirement ages and what those ages are.

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