First Month of Social Security

[Sandy & Shirley]

My GF plans to retire on her survivor benefits in May 2018 at age 62. We looked at the possibility of starting her Social Security in January and found the page https://www.ssa.gov/planners/retire/whileworking.html “Getting Benefits While Working” which limited the amount that she could earn while getting benefits to $15,720. This page led to the page https://www.ssa.gov/planners/retire/rule.html “Special Earnings Limit Rule” which limited her income to $1,310 each month.

Basically she would have to give almost all of her January to April benefits back.

But, the second rule is talking about “earnings” in each month, so this leads me to my question for the group.

If she stops work on April 30 and start her benefits on May 1, she will get her actual last paycheck in May and probably another check of two for things like unused vacation and profit share.

All of the May checks will be for work done before May, so will these checks in May limit the size of her first Social Security check?

 

[RE2Boys]

From social security pamphlet:https://www.ssa.gov/pubs/EN-05-10069.pdf

"Sometimes people who retire in midyear
already have earned more than the
annual earnings limit. That’s why there
is a special rule that applies to earnings
for one year, usually the first year of
retirement. Under this rule, you can
get a full Social Security check for any
whole month you’re retired, regardless of
your yearly earnings.
In 2016, a person younger than full
retirement age for the entire year is
considered retired if monthly earnings
are $1,310 or less.
7
For example, John Smith retires at
age 62 on October 30, 2016. He will
earn $45,000 through October. He
takes a part-time job beginning in
November earning $500 per month.
Although his earnings for the year
substantially exceed the 2016 annual
limit ($15,720), he will receive a Social
Security payment for November and
December. This is because his earnings
in those months are $1,310 or less, the
monthly limit for people younger than
full retirement age. If Mr. Smith earns
more than $1,310 in either November or
December, he won’t receive a benefit for
that month. Beginning in 2017, only the
annual limit will apply to him.

Note that benefits for November are paid in December

 

[Sandy & Shirley]

Thanks for the recap RE2Boys

The key question here is exactly what happens in the very first month of retirement. In the example given, absolutely nothing was “earned” in May, but you will receive multiple checks in May for April earnings, unused vacation, profit sharing, etc. Will any of those May payouts cause a reduction in the May benefit check?

 

[nate2953]

The really short and simple answer is no.

The deeper answer is wages are counted for the month you earn them, not the month they are paid. Vacation, holiday pay, sick pay cash outs, bonuses etc won't cause her to be over the limit for the monthly earnings test. May-December will be non-service months and that means she can get paid.


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