My husband filed for retirement benefits March 2018. He will turn 66 FRA November 2018.
I am confused about the first year earnings limit rule.
If he earns less than $45360 for the year Jan-Dec 2018 but some months March - October he might go over the $3780 per month as he is in sales. Will Social Security go by what benefits the recipient the most or do they only allow you to earn $3780 a month. If he happens to go over the $45360 but that amount wasn't reached until November or even December does he have to prove he didn't earn the $45360 in the months prior to FRA ? Will they then take $1 for every $3 earned over the limit for the months he went over or will they take an entire check? When would he get it back...over a ten year period and when would that begin. It's all very confusing and to be honest, I keep getting mixed answers from those at the social security offices.

Hi,

If your husband earns no more than $45360 from January 1 through October 31 this year, he won't lose any of his benefits to the Social Security earnings test regardless of how much he earns in any individual months. He should keep any pay slips or other evidence that shows his earnings through October 31st, since that's about the only way that he could prove his countable earnings if his earnings in November and December cause his calendar year earnings to exceed $45360.

If you husband earns more than $45360 from January 1 through October 31 and he earns more than $3780 in any of the months prior to November for which he was paid Social Security benefits, then he would likely need to pay back $1 of his benefits for each $3 of his excess earnings unless some of his benefits are withheld during this year. He wouldn't be directly repaid that money, but what would happen is that his benefit rate would be recalculated to remove the percentage reduction applicable for any months prior to November that he ended up not being paid in full.

For example, say Bob files for his benefits effective with March 2018 and receives a reduced benefit rate of $1433. Bob's full retirement age (FRA) is November 2018, and had he waited until FRA to start receiving his benefits he would have received an unreduced rate of $1500. So, in other words, the $67 reduction in Bob's benefit rate represents 8 months of reduction at 5/9th's of 1% per month.

Let's then say that due to Bob's 2018 earnings he ends up having to pay back the benefits he received for the months March and April 2018. That would amount to a repayment of $2866 in our example (i.e. 2 x $1433). In return, effective with Bob's benefit for November 2018 his benefit rate would be recalculated to remove 2 months of the previously assessed reduction for age. In Bob's case that raises his benefit rate from $1433 to $1450. Thus, if Bob lives long enough he will recoup the $2866 that he had to repay in the form of his $17 per month increased monthly benefit rate.

Your husband may want to consider using our maximization software to see if he has better filing options available to him than the one he chose. Our software may also be of help to you if you haven't yet filed for benefits.

Best, Jerry