Hello Larry. I am planning to retire in February 2021 at 65.5 months, which is a bit less than a year from my full retirement age. My earnings in 2020 will be among my highest over 35 years. I have been told (by someone who purports to know about these things) that my earnings for 2020 will not factor into my benefit calculation since I plan to retire at the beginning of the year, and these 2020 wages may not be reported to social security in time. Is this true?
Thank you.

Hi,

What you were apparently told is false. Your 2020 Social Security covered earnings can be used to calculate your Social Security retirement benefit rate regardless of when you retire. 2020 earnings can be used to calculate a person's retirement benefit rate effective with their benefit payment for the month of January 2021. However, if you apply for benefits before proof of your earnings is available, Social Security may need process your claim without using the earnings and then recalculate your benefit rate once proof of the earnings is received. You wouldn't lose any benefits if that happens, though, because Social Security would reimburse you for any amount of underpaid benefits.

It's true that there's a lag time before earnings get posted to a person's Social Security earnings history, but the earnings can still be used once proof of the earnings is received. Wages are usually posted to a person's earnings history by around April of the year following the year of the earnings, but the posting of self-employment earnings can take longer depending on when a person's tax return is filed. Social Security can give you credit for earnings even before your earnings are posted to your earnings record if you submit proof of the earnings, though, so if you file your application in the first part of 2021 you can get immediate credit for your 2020 earnings as long as you submit proof of the earnings to Social Security (e.g. W-2 for wages, tax return schedule SE for self-employment).

Best, Jerry