I am 64 would like to retire December 31, 2018 and apply for/draw early social security rather than wait until I'm 66. I plan to find a part time job to supplement my benefits, keeping in mind the benefit cap. I was given very confusing advice at the local social security office about when to file. I am especially confused about when it is best to file to avoid a penalty Should I apply for benefits after January 1, 2019 when I am no longer employed and earning income?

Hi,

You can file an application up to 4 months prior to the month that you want to start your benefits, or as late as the month that you want to start your benefits. When you file your application within that time frame wouldn't matter with regard to the earnings test.

The earnings test exempt amount for 2019 won't be announced until late this year, but it will likely only be a bit higher than the 2018 exempt amount of $17040. So assuming that you want to claim benefits starting with January 2019 you'll need to keep your earnings in 2019 below the 2019 exempt amount of else you'll lose $1 of benefits for each $2 that you earn in excess of the exempt amount. However, if you will reach your full retirement age of 66 before the end of 2019 then you would be eligible for a higher exempt amount ((https://www.ssa.gov/planners/retire/whileworking.html).

If you claim benefits starting January 2019, anything you earn in 2018 won't count against the 2019 earnings limit. But, if you are paid in January 2019 for work performed in December 2018 Social Security will have no way of knowing when you earned the money. Therefore, in order to prevent them from counting any such earnings toward the 2019 limit you may need to show them pay slips or other evidence to document the amount of your 2018 earnings paid in 2019.

Before deciding on when to start drawing your benefits, though, you should strongly consider using our software to compare all of your filing options in order to make sure that you're choosing the best possible filing strategy.

Best, Jerry