Born on first of month – FRA and the retirement test

Q: I reach my full retirement age (FRA) of 66 on May 1, 2013. Is there any significance to waiting until age 66 ½ to start my Social Security retirement? That is when I plan to retire. 

A: You can start your Social Security retirement with whatever month you think best, if you meet all requirements at the time. 

If starting SSA retirement when older than full retirement age, your monthly amount would be more than the full retirement age (FRA) amount. If starting before FRA, the amount would be less than the FRA amount.The amount of increase or reduction depends on the specific number of months involved, not your age in years.

Being born on the first day of the month is important for you. Legal precedent states that a person attains their age on the day before their birthday. When born on the first of the month, Social Security figures your benefit amount and your full retirement age as if your birthday was in the previous month. With a birthday of May 1, you are considered to reach FRA in April. Consider this when deciding when to start your Social Security retirement.  

Estimate your full retirement age (FRA) amount with the Retirement Estimator in the SSA Retirement Planner section (www.socialsecurity.gov/retire2/). Then, use your estimated FRA amount with the “compute the effect of early or delayed retirement” calculator to estimate amounts for specific months before or after FRA. This calculator is at http://www.socialsecurity.gov/OACT/quickcalc/early_late.html#calculator

How much will you earn in 2013? The earnings limit (annual earnings test) for people turning age 66, their full retirement age, in 2013 is $40,080. A special monthly, one time, earnings test exists and usually used in the first year of retirement if high earnings are expected that year. Depending on your anticipated 2013 earnings, you might decide to start benefits with January, with a smaller monthly benefit, even though you plan to continue working until May. Use the tools mentioned above to estimate benefits starting with any month. The earnings test stops with the month you reach full retirement age. With no limit on your earnings, starting your Social Security at FRA is another option even if you continue to work.

 

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