Do you need to update your 2014 earnings estimate?

A question received in the office relates directly to my January 28 post about annual earnings reports and earnings estimates.

The caller, age 64, said that a letter from Social Security stated she would not receive her Social Security retirement benefit for January and part of February due to her estimated 2014 gross wages of about $20,000.

Where, she asked, did that information come from? She retired in 2013 and only expected minimal part-time earnings in 2014.

The estimated earnings amount came directly from her 2013 retirement application. The application asks for a current year and following year estimate from wages and self-employment.

At age 64, she will be younger than her full retirement age (FRA) for all of 2014. Since her estimated earnings for 2014 was above the 2014 annual earnings test amount for her age, Social Security adjusted her benefits payable during 2014 to account for the excess and then resumed monthly payment.

All she needed to do was report her actual earnings for 2013 and provide an accurate estimate of her 2014 gross wages. This was easily completed and, with her new estimate below earnings test limits, benefits could be paid for all months of 2014.

If you received SSA retirement or survivors benefits and were younger than full retirement age (FRA) for at least part of last year, report your 2013 employment earnings if your estimated or actual earnings were more than 2013 earnings test amounts for your age. Amounts for 2013 are in the January 28 post. At the same time, be sure your estimated 2014 earnings are correct based on your current work plans.

Before potentially reducing SSA benefits for 2014 a person younger than their full retirement age (FRA) the entire year could earn $15,480. A person reaching FRA during 2014 could earn $41,400 before reducing their retirement benefits. There is no earnings limit starting with the month you reach full retirement age. Examples of how the annual earnings test is applied are here.

 A special rule exists for people who retire during the year after already earning over annual limits. This one-time rule lets Social Security pay retirement benefits for any whole month that you are considered retired, even when having high earnings prior to retirement.

You can change your 2014 earnings estimate as needed during the year by calling the SSA national toll-free phone number 1-800-772-1213 / TTY 1-800-325-0778 or contacting your local office. Earnings for the annual earnings test include only your own gross wages from employment and net-income from self-employment.

The earnings test does not apply if you receive benefits because you have a disability. In this case, report starting or ending work to Social Security at the time. The earnings test does apply to family members receiving benefits through someone receiving Social Security disability.

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