I turn 66 on February 2019. I currently work and plan to stop working on 3/31/2018. I will start collecting social security on March 2018, with my first check due in April 2018. In the first 3 months of the year I will earn $22,000. In reading the SS Website it says If I earn more than $17,140 in 2018, my benefits will be reduced since I am not full retirement age. How will the Earnings Test impact my social security benefit? Are the earnings made during the months I am not collecting SS benefits used to reduce my benefit? Do I need to consider stopping work earlier to avoid earning more than the $17,140?

Thanks in advance.

Ralph

Hi,

If you follow your plan as indicated, it sounds like Social Security will either withhold your check for March 2018 or ask you to pay that money back. The annual exempt amount for 2018 is actually $17,040, and your earnings for the entire calendar year count against that limit even if you only plan to draw benefits for part of the year. However, there is an alternate monthly earnings test that can be used in the first year of entitlement to benefits if it is more advantageous (https://www.ssa.gov/planners/retire/rule.html). The monthly test would allow you to be paid for any month of 2018 in which you earn $1420 or less, regardless of the amount of your calendar year earnings.

Bottom line, if you want to draw benefits starting with March 2018 you need to either keep your 2018 calendar year earnings below $17,040, or you need to limit your earnings to no more than $1420 in every month starting with March.

Before filing, you may want to strongly consider using the maximization software available on this website in order to determine your optimal filing strategy.

Best, Jerry