Will my earnings before retiring this year lower SSA retirement?

Q: If I retire in May or June of this year, do my earnings for this year count against me for my 2013 Social Security benefits?  In other words, if I make more than $15,120, before I retire this year, am I penalized on my Social Security checks for the remaining months of 2013?  

A: This question is about the annual earnings test, how earnings in a year affect Social Security benefits payable for that year. 

The annual earnings test is based on the calendar year. Annual earnings levels depend on whether you are under full retirement age (FRA) for the entire year, reach FRA during the year, and once you reach FRA. Actual amounts involved usually change each year.  

People start Social Security retirement all during the calendar year. Some people who retire in mid-year have already earned more than their yearly earnings limit so there is a special rule that applies to earnings for one year, usually the first year of retirement. The special rule lets you receive a full Social Security check for any whole month that you are retired, regardless of your calendar year earnings.  

Returning to the question, if this person is at least age 62, has enough work to be insured, and retires in May or June, Social Security can still start for the following months despite high earnings before retirement. Note that the amount mentioned in the question is for a person younger than full retirement age the entire year.

One of the reasons that I often mention the retirement planner section of the Social Security website is that a lot of information is there to help in your planning. In addition to the different calculators and other tools, information about working while receiving retirement benefits is there. 

In particular, see the section “Work after you retire” for annual earnings test information. There, the part about the “special rule that applies to earnings for one year” has information about the monthly earnings test for 2013. 

The publication “How Work Affects Your Benefits” (publication 05-10069) will also be helpful.

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