One-time monthly earnings test rule


Q: I plan to retire in September at age 63. If I have earned over $17,000 so far this year, can I still start Social Security when I retire?

A: Yes, a person can receive Social Security when they retire even if having high earnings up to retirement.

This question is about the annual earnings test, also known as the retirement test.

Gross wages or net self-employment above earnings limits in a year can reduce Social Security payable during the year. The amounts vary based on your age compared to full retirement age (FRA), which is age 66 for birth years 1943 – 1954. Earnings limits end with the month you reach FRA. For a person younger than FRA all year, the 2015 earnings limit before benefit reduction is $15,720.

People retire all during the year and many have earned over annual earnings limits before then. For them, a one-time special earnings limit rule lets Social Security be paid for months of actual retirement even if calendar year earnings are high.

Earnings test information for 2016 should be available during October.

Including earnings test amounts, lots of SSA retirement planning information is on the Social Security website,, in the Retirement Benefits section and especially in the Retirement Planner area at

Different calculators are in the Retirement Planner section for your use. One of these is an “earnings test calculator” to help you see how your earnings may affect your benefit payments if you are currently working and are eligible for retirement or survivors benefits this year.


Receiving Social Security? Is your earnings estimate accurate?

Q: I am 64, work part-time and receive Social Security retirement. In 2015, I will earn more than expected. Should I update my earnings estimate with Social Security?

A: You probably should but it depends on what your original estimate was and what your current estimate is.

Gross wages or net self-employment earnings in a year can reduce benefits for the year until full retirement age (FRA). If expecting earnings over the 2015 limits for your age, update your earnings estimate now.

At age 64, which is younger than your FRA, the 2015 earnings limit is $15,720. Earnings over this will reduce benefits. Lower earnings will not.

If your current 2015 earnings estimate is over $15,720, you should definitely contact Social Security and update your estimate. On the other hand, if you originally expected to earn $10,000, but will actually earn $14,000, an updated estimate is not needed because both amounts are less than the $15,720 limit for 2015 and neither would reduce benefits payable this year.

Earnings test amounts vary based on your age compared to your full retirement age. Details about 2015 earnings limits for different ages are in the SSA retirement planner section,, and in publication 05-10069, How Work Affects Your Benefits, also in that section. Pensions and other non-employment income do not count for the earnings test.

If younger than full retirement age for all or part of the year, keeping your estimated calendar year earnings current with Social Security is important if you expect to earn over the earnings limit. This is especially so if your original estimate was below the limit and you will actually earn over it. You can update your estimate anytime during the year.

If you will earn more than originally estimated, and the amount is above your earnings test limit, updating your estimate now can prevent or reduce the chance of your being incorrectly paid and needing to refund money to Social Security.

If you originally expected to earn above your 2015 earnings test amount limit, but will really earn less, updating your estimate now can release any withheld benefits to you faster.

If your final earnings this year are over the annual limit for your age, report actual 2015 amounts directly to Social Security when you get your W-2 form, or if self-employed when you complete your taxes. This is different from tax filings.

The earnings test can apply to anyone younger than full retirement age if receiving Social Security benefits that are not based on their own disability. Separate rules apply to people receiving benefits because of their own disability. If working, they should contact Social Security for information.

Earnings test information for 2016 should be available during October.

See “What You Need To Know When You Get Retirement or Survivors Benefits” for other things to report. Call Social Security nationally at 1-800-772-1213 (TTY-1-800-325-0778) or contact your local office to report changes including your earnings estimate.

How many people pay into Social Security?

Last week I wrote about how to correct a work record that was missing some employment earnings.

It is important for your personal record to be correctly posted. In addition to helping fund current Social Security benefits, your earnings are used to compute your future retirement amount.

Through W-2 reporting and self-employment tax information, the Social Security Administration works with the earnings information of almost everyone employed in the country.

How many people is this?

The Research, Evaluation and Statistics component of the Social Security Administration released the publication “Earnings and Employment Data for Workers Covered Under Social Security or Medicare, 2012” in June.

From the Preface:

This report presents 2012 earnings and employment data by state and county for persons covered under the Social Security and Medicare programs.

The data show, by sex and age, the number of wage and salary workers and self-employed persons, the amount of their taxable earnings, and the amount they paid in Social Security and Medicare contributions.

From the Highlights section:

Social Security

  • In 2012, 161.7 million workers had earnings taxable under the Social Security program. About 143.0 million had only wages, 11.2 million had only self-employment income, and 7.5 million had both.
  • Social Security taxable earnings totaled $5.712 trillion, which includes earnings up to the taxable maximum of $110,100.
  • Social Security taxes totaled about $708 billion. 


  • In 2012, 165.6 million workers had earnings taxable under the Medicare program. About 146.1 million had only wages, 10.9 million had only self-employment income, and 8.6 million had both.
  • Medicare taxable earnings totaled $7.133 trillion.
  • Medicare taxes totaled about $207 billion.

The “Earnings and Employment Data for Workers Covered Under Social Security or Medicare, 2012” publication is available in pdf and html versions.



Correcting your work record

Q: I work part-time as an employee for a business and receive a W-2 for those wages plus I have separate self-employment earnings that I pay taxes on when filing my taxes each year. Only the W-2 wages appear on my most recent Social Security Statement. Since I have been paying self-employment taxes, shouldn’t they be on my Social Security number earnings history as well? How do I fix this?

A: Most people who pay into Social Security work for an employer. Their employer deducts Social Security taxes from their paycheck, matches that contribution, sends taxes to the Internal Revenue Service (IRS), and reports wages to Social Security. If registered for SSA Business Services, employers can verify employee Social Security numbers online and report W-2 wage information electronically.

Self-employed people must report their earnings and pay their taxes directly to IRS. If self-employed, you report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to the other tax forms you must file.

All employment earnings for a year are usually posted to your personal work record near the end of October of the following year so your total 2014 employment earnings should be posted to your record approximately the end of October 2015. This applies whether or not a person receives monthly Social Security benefits. When already receiving benefits, new earnings are automatically reviewed to see if they will increase the amount.

If earlier years are not correctly posted, your local Social Security office can help correct your record. Evidence generally needed includes proof of the earnings, such as a W-2 and 1099. For self-employment, tax return information including tax form Schedule SE and proof of tax payment is also needed.

If you received your Social Security Statement by mail, know that you can get a copy of it anytime at your convenience by creating a personal, pin and password protected, my Social Security account. More about doing this is at

Working and Supplemental Security Income (SSI)

On April 23, I posted about returning to work when receiving Social Security disability. Special rules called work incentives make it possible for people with disabilities, whether receiving Social Security or Supplemental Security Income (SSI), to work and still receive monthly payments and Medicare or Medicaid.

Returning to the topic, today I will mention one of the work incentives when receiving Supplemental Security Income (SSI).

Since SSI is very different from Social Security, the work incentives are different too. SSI involves cash assistance payments to aged, blind and disabled people (including children under age 18) who have limited income and resources. The Federal government pays for SSI from general tax revenues, not Social Security money.

If receiving both Social Security and SSI, you need to follow the separate rules for each program. To discuss your own benefits, speak to a Social Security representative.

Always report a return to work. This is very important. Also report related changes including stopping the work. 

A very basic Supplemental Security Income (SSI) work incentive is the exclusion of some employment income when figuring out the amount of a monthly SSI payment.

When working, the first $65 of earnings received in a month do not count, plus one-half of the remaining earnings. This means that less than one-half of your earnings are counted against your SSI payment amount.

For an example of how this works, use gross wages of $165 received in a month. Not counting the first $65 dollars leaves $100 remaining. Then, not counting an additional one-half of this $100 remaining amount leaves only $50 to reduce the overall SSI amount. In this example of the earned income exclusion work incentive, of the received $165 wages in the month, $115 is not used to lower benefits.

People receiving Supplemental Security Income (SSI) usually report their earnings on a monthly basis to keep benefit amounts accurate.  Discuss how to do this when reporting a return to work.

Referring to the post of April 23, when a person receiving SSI returns to work, the Social Security trial work period (TWP) or concept of substantial gainful activity (SGA) do not apply. To restate, if you receive both Social Security and SSI, you need to follow the separate rules for each program.

Only one SSI work incentive was mentioned today. Many other work incentives can apply. To discuss your own benefits, speak to a Social Security representative.


When to report work for the annual earnings test

Q: I retired last year, started Social Security, and expect to work part-time this year on a fill-in basis. If I reach the retirement earning limit amount for the year, is it my responsibility to notify Social Security? Are benefits reduced for work immediately or resolved at years’ end. I am 63.

A: Yes, it is your responsibility to contact Social Security. Report your estimated earnings for the calendar year as soon as you think your earnings will exceed the annual limit for your age. You can provide updated estimates during the year as needed for changes up or down.

Providing an estimated earnings amount to Social Security is needed when you expect to earn more than your earnings limit amount during the calendar year. For example, at age 63 in 2015, you are under full retirement age (FRA) for the entire year and must provide an estimate if expected gross wage earnings will exceed $15,720. An estimate is not needed when annual earnings are expected to below the earnings limit.

Adjustments based on your estimated earnings will take place as soon as possible in order to avoid having you incorrectly paid. The usual suggestion to people expecting to earn over the annual limit for their age is to provide an estimate as accurate as possible, but to the high side.

Later, when you receive your W-2 form at the end of the year, report your actual earnings for the year directly to Social Security. Based on your actual earnings, final adjustments are made to either send you benefits due or to withhold those incorrectly paid.

A list of your various Social Security reporting responsibilities is in the booklet, What You Need to Know When You Get Retirement Or Survivors Benefits, available online. Work activity is a topic discussed over several pages of the booklet and an excerpt from page 17 includes:

“Your earnings estimate and your benefits

We adjusted your benefits this year based on the earnings you told us you expected to receive this year.

If other family members get benefits on your record, your earnings may affect the total family benefits. But, if you get benefits as a family member, your earnings affect only your benefits.”   

“Revising your earnings estimate

When you work, you should save your pay stubs. If during the year, you see your earnings will be different from what you estimated, you should call us to revise the estimate. This will help us pay you the correct amount of Social Security benefits.”  

More about working while receiving Social Security retirement or survivors benefits is here.

Social Security disability work incentives

Q: I receive Social Security disability and want to return to work. What will this do to my benefits?

A: For specific information about your own benefits, contact Social Security and speak with a representative.

In general, special rules called work incentives make it possible for people with disabilities receiving Social Security or Supplemental Security Income (SSI) to work and still receive monthly payments and Medicare or Medicaid.

Remember that Social Security, including disability (SSDI), and SSI are different programs, with different work incentives for returning to work.

Always report a return to work. This is very important. Also report related changes including stopping the work.

For Social Security disability, a main work incentive is the trial work period (TWP).

The trial work period allows you to test your ability to work for at least 9 months. During a trial work period, you receive full disability benefit regardless of how much you earn as long as your work activity has been reported and you continue to have a disabling impairment. The 9 months does not need to be consecutive and your trial work period will last until you accumulate 9 months within a rolling 60-month period. Certain other rules apply. In 2015, gross monthly earnings of $780 or more will usually count as a month toward the TWP.

After a trail work period is completed, your work activity will be reviewed to see if you earnings are considered substantial gainful activity (SGA) . Exceptions apply but, in general, in 2015 monthly gross earnings of at least $1,090 are considered SGA for a person who is not blind and $1,820 for a person who is blind. Ongoing ability to work at a substantial gainful activity level can result in benefits being stopped.

If this occurs, you have an extended period of disability (EPE).

This means that if your disability benefits stop after successfully completing the trial work period and ongoing work at the substantial gainful activity (SGA) level, your Social Security disability benefits can be automatically reinstated without a new application for any months in which your earnings drop below the SGA level.

This reinstatement period lasts for 36 consecutive months following the end of the trial work period. You must continue to have a disabling medical impairment in addition to having earnings below the SGA level for that month.

Continuation of Medicare.

Of major importance, even if cash benefits end, for most beneficiaries existing Medicare coverage continues through the EPE and beyond.

Most persons with disabilities who work will continue to receive at least 93 consecutive months of Hospital Insurance (Part A); Supplemental Medical Insurance (Part B), if enrolled; and Prescription Drug coverage (Part D), if enrolled, after the 9-month Trial Work Period (TWP).

You do not pay a premium for Part A. Although cash benefits may cease due to work, you have the assurance of continued health insurance. (93 months is 7 years and 9 months.)

This is not a complete list of work incentives for Social Security disability insurance (SSDI). There are different work incentives for Supplemental Security Income (SSI). More general information is here.

Again, for details about your own benefits, speak to a Social Security representative.


Earnings test not just for retirement benefits

Q: Do the Social Security earnings limits apply just to retirement? Do they apply if receiving widow’s benefits?

A: Yes, earnings limits apply for survivor benefits. The annual earnings test applies individually to everyone younger than their full retirement age (FRA) unless that person receives benefits due to their own disability. People of all ages receive Social Security and the earnings test applies to many of them.

For examples, if both members of a couple receive Social Security retirement, the earnings test applies separately to each until full retirement age. The earnings test also applies to a child, not disabled, receiving benefits through a parents record whether the parent is retired, disabled or deceased.

The earnings test does not apply to people receiving benefits because of their own disability but it does apply to non-disabled family members, including spouse and children, receiving benefits through the disabled person’s record.

Many young people receive Social Security benefits. Earnings test amounts are the same whether SSA retirement, survivors or disability is involved. Different amounts can be earned during the calendar year before benefits are reduced based on if the person is under full retirement age (FRA) the entire year, reaches FRA during the year, or is already FRA. The earnings test ends when you reach FRA.

Based on year of birth, full retirement age ranges from 65 to 67. Retirement FRA is 66 for people born in 1943 – 1954. Note that FRA’s for survivors benefits are different from retirement FRA’s.

Earnings test details are here.

Separate earning rules and work incentives apply if you receive Social Security due to your own disability. Contact Social Security before returning to work. General information is here.

Special payments after retirement

Q: I retired in 2014 but expect income in 2015 from work done before I retired. Will this lower my 2015 Social Security benefits?

A: For people younger than full retirement age, the Social Security annual earnings test, also called the retirement test, concerns how much can be earned from wages or self-employment in a calendar year without reducing benefits during that year.

Termed a special payment, money received for work done before retirement is not normally included for the earnings test. Income received after retirement is a special payment if the last thing done to earn it was completed before stopping work. Examples could include accumulated vacation or sick pay, bonuses and sales commissions. If self-employed, net income received after the first year you retire is a special payment if you performed the services to earn the payment before becoming entitled to receive Social Security. 

For example, say a person retired at the end of 2014 and started receiving Social Security retirement as of January 2015. In January, the person receives payment from the former employer for unused vacation time. Since this vacation pay was earned before retirement, it is considered a special payment and not counted towards the 2015 annual earnings limit. 

Two local occupations often receiving special payments for SSA retirement purposes are insurance salespeople and farmers. Insurance commissions for policies sold before retirement but received after the year of retirement are usually special payments. If a farmer fully harvested and stored a crop before or in the month of entitlement to SSA benefits, and then carried it over for sale in the next year, the income will not affect benefits for the year of sale. Keep documentation related to this. 

As always, this is general information.  To learn more, read the SSA publication, Special Payments After Retirement, at or contact Social Security.  Annual earnings test information is at

Is payroll tax withheld if I work and receive Social Security?

Q: I stopped working full-time at the end of 2014 and started Social Security retirement. For the next few months I will work part-time and then retire completely.

Will Social Security payroll tax be held from my paycheck? If yes, will this increase my retirement amount? 

A: Yes, you continue to pay Social Security and Medicare payroll taxes. Your employer will continue doing so too. Everyone working in employment or self-employment covered by Social Security must pay payroll taxes regardless of age or eligibility to Social Security benefits. Current and historical Social Security and Medicare tax rates are shown here. 

If you are younger than full retirement age, remember annual earnings test limits.

Your new earnings would have to be better than the ones already used to compute your retirement amount to increase your monthly retirement amount. While possible, it is doubtful that a few months of part-time work will change your monthly retirement amount since the best 35 years of your working career are used.  

Benefit amounts of everyone receiving Social Security benefits are automatically reviewed when new earnings are posted to their work record even when low earnings are involved. Due to this, your retirement amount will be automatically reviewed once these 2015 earnings appear on your work record. 

Since you worked full-time all of 2014, it is much more likely that your 2014 earnings will increase your retirement amount when automatically reviewed. 

Employers report your earnings to the Social Security Administration as part of the W-2 process. Different employer deadlines apply based on how reporting is completed. Employers have a March 31 deadline if electronically reporting 2014 W-2 information using Social Security Business Services Online (BSO). If reporting by paper, the deadline is the last day of February.

However reported, national posting of all wage information is usually complete in approximately October, with automatic reviews of benefit amounts starting once wage posting is complete. If 2014 earnings increase retirement benefits, you will receive the increase in approximately December 2015, with payment retroactive to January 2015.