Working & benefits: the 2014 retirement earnings test

The 2014 Social Security cost-of-living adjustment (COLA) changes more than just the amount of monthly benefits received. Another change increases the annual retirement earnings test amounts for 2014. You can earn more in 2014 than in 2013 before benefits are reduced.

The annual retirement earnings test concerns how your own employment earnings in a year affect your Social Security in that year. The earnings test includes only your personal gross wages or net self-employment for the full calendar year. Your other income or the income of a spouse is not applicable.

So, in 2014 how much can you earn before your Social Security benefits for the year are reduced? Amounts depend on your age.

Three annual earnings levels exist, all based on your full retirement age (FRA).  

Earnings test amounts for 2014 are:  

  • If under full retirement age (FRA) for the entire calendar year, $1 in benefits will be deducted for each $2 earned above the 2014 limit of $15,480.
  • If you reach FRA in 2014, $1 in benefits will be deducted from each $3 earned above the 2014 limit of $41,400, but only for earnings before the month you reach FRA.
  • No earnings limit exists starting with the month you reach full retirement age.

Do you plan to start Social Security retirement in 2014? Often people retiring mid-year have already earned over the annual limit for their age. To allow the start of SSA retirement regardless of expected calendar year earnings, there is a special one-time rule based on monthly earnings. This applies for one year, usually the first year of retirement, and lets people receive Social Security for months that they are retired.

For example, a person retiring in 2014, at least age 62 but younger than full retirement age the entire year, can receive Social Security retirement for months that gross wages do not exceed $1,290 even though overall calendar year earnings will be far above retirement test amounts. Similar rules apply for self-employment. 

Learn about the earnings test at www.socialsecurity.gov/retire2/whileworking.htm. As of today, 2014 retirement test amounts were not shown there but these amounts are on a fact sheet of 2014 Social Security changes at http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2014.html.

See www.socialsecurity.gov/retire2/rule.htm for more about the special, one-time, monthly test.

The earnings test does not apply to people receiving Social Security benefits due to their own disability. If receiving benefits due to disability, contact Social Security before working.

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