Social Security and income question

[garyt]

I understand that you can only make $14,000 and change while collecting SS without losing some of your SS. But I assumed that was in a calendar year but a friend tells me the "year" starts in the month you retire? I'm planning on retiring in May, would I then be able to make $14K from May till next May? Or will it jjust be calendar year 2019?

 

[lemming]

Yes the clock starts when benefits start. And only in the years up to your full retirement age-then there is no limit.
https://blog.ssa.gov/working-while-retired/

 

[Dtail]

Keep in mind you only lose the SS benefits on a temporary basis.

 

[kaneohe]

The limits are given by calendar yr so to me it sounds like they measure by calendar yr.

 

[mountainsoft]

For 2019 you can earn up to $17,640 before it affects your social security.

https://www.ssa.gov/planners/retire/whileworking.html

 

[Katsmeow]

The limits are given by calendar yr so to me it sounds like they measure by calendar yr.

It is handled differently during the first year of retirement.

 

[garyt]

Yes the clock starts when benefits start. And only in the years up to your full retirement age-then there is no limit.
https://blog.ssa.gov/working-while-retired/

So, this being my first year and the fact I'm retiring in May, nothing I make before then counts?

 

[garyt]

So after doing more reading, I see that even if they reduce your SS by the $1 for every $2 you make over the limit, you don't actually lose that money. At FRA they figure out how much was withheld and then readjust your monthly benefit up.
My first take on this is that it could be a win/win. Taking SS at 62 would limit what I need to withdraw from savings , yet my benefit will increase a bit later in life. Won't matter much to me as it's just a few months, but might be a good thing for somebody who's planning on working to say 63-64?

 

[VanWinkle]

So, this being my first year and the fact I'm retiring in May, nothing I make before then counts?

Here are the special earnings rule for year one of retirement:



https://www.ssa.gov/planners/retire/rule.html

 

[joeea]

My first take on this is that it could be a win/win. Taking SS at 62 would limit what I need to withdraw from savings , yet my benefit will increase a bit later in life. Won't matter much to me as it's just a few months, but might be a good thing for somebody who's planning on working to say 63-64?

Not likely to be a good thing. It won't make up for the huge decrease in benefits you would have gotten had you waited until 70 to claim.

And remember, after your FRA, there is no penalty no matter how much you earn.

 

[Masquernom]

Also, consider that up to 85% of your social security can be taxed depending on your income level. That doesn't go away at full retirement age.

 

[EarlyBirdly]

... It won't make up for the huge decrease in benefits you would have gotten had you waited until 70 to claim.

And, The Conundrum : It won't make up for the huge increase in benefits you would have gotten had you claimed at 62....and died at 69.

 

[lawman]

And, The Conundrum : It won't make up for the huge increase in benefits you would have gotten had you claimed at 62....and died at 69.

Exactly!

 

[Perryinva]

But....you would be dead..so why would you care?

 

[garyt]

Not likely to be a good thing. It won't make up for the huge decrease in benefits you would have gotten had you waited until 70 to claim.

And remember, after your FRA, there is no penalty no matter how much you earn.

I was assuming the person would take SS whenever they first retired, not at FRA or 70 .

 

[audreyh1]

I was assuming the person would take SS whenever they first retired, not at FRA or 70 .

Many early retirees do not take SS immediately but wait until they think is optimal for them based on whatever criteria is most important to them.

 

[joeea]

And, The Conundrum : It won't make up for the huge increase in benefits you would have gotten had you claimed at 62....and died at 69.

That's true!

If you plan to die at 69, you should strongly consider starting your Social Security benefits at 62. And you might not even want to consider working during that time.

Unless you plan to leave a surviving spouse. Then maybe not.

 

[joeea]

I was assuming the person would take SS whenever they first retired, not at FRA or 70 .

Okay. I'm not sure why you would assume that - particularly on an early retirement forum.

 

[JAB1950]

Can you avoid the SSI reduction due to excess earnings if you contribute the overage amount to an IRA?

 

[MissMolly]

No. IRA contributions are added back in to your AGI to get your MAGI. You can, however, make qualified charitable deductions to get your MAGI lowered.

https://www.healthmarkets.com/resources/medicare/what-is-irmaa/

 

[kaneohe]

No. IRA contributions are added back in to your AGI to get your MAGI. You can, however, make qualified charitable deductions to get your MAGI lowered.

https://www.healthmarkets.com/resources/medicare/what-is-irmaa/

just remember......no QCDs until you are 70.5

 

[kimcdougc]

Thank you for all the knowledgeable posts. DH is turning 62 in November and will begin his ss in January 2020. It sure does help know how much he can "earn" etc. Saves me from having to look all this stuff up. Again, thanks.

 

[MissMolly]

just remember......no QCDs until you are 70.5

Oh, yes, a big thing to remember. Remiss of me not to say that. Thank you for clarifying.

 

[kaneohe]

Can you avoid the SSI reduction due to excess earnings if you contribute the overage amount to an IRA?

No because the earnings used are gross earnings if from wages:

https://www.ssa.gov/pubs/EN-05-10069.pdf
"What income counts…and when
do we count it?
If you work for someone else, only your
wages count toward Social Security’s
earnings limits. If you’re self-employed,
we count only your net earnings from
self-employment. For the earnings
limits, we don’t count income such as
other government benefits, investment
earnings, interest, pensions, annuities,
and capital gains. We do count an
employee’s contribution to a pension
or retirement plan, however, if the
contribution amount is included in the
employee’s gross wages."

 

[GenXguy]

You may also not pay SS taxes on health insurance and flex spending plans through your employer, among some other things. I know I don't. This is accounted for on your W2 where it shows SS wages.