Social Security rules can get a little convoluted when you retire before the normal retirement age, and, in all other senses, retirement is a very big deal. A specific rule shifts consideration of your earnings during the first year of retirement, providing retirees a chance to get benefits under certain conditions. Here are the rules.
How the special rule works
Most people would retire midway through the year, thus having usually earned more than the SSA annual earnings limit. Exceeding that limit would generally be detrimental to Social Security benefits. However, under the special rule, retirees may receive their full benefits for any month they are considered retired as long as earnings during that month remain below a specified level.
It generally means that—because the SSA considers any income received at all during the year but counts income only for a single month for the purpose of benefits—if during that month your income was below the threshold, you were retained even though your income for the entire year may have exceeded the limit.
Eligibility requirements
For the special rule to apply, retirees must follow these general rules:
- Retirement age: This rule will only apply if the retirement actually occurs prior to attaining the FAA.
- Limited earnings: For any month in which you wish to collect full benefits, your earnings are to be below some monthly threshold amount determined by Social Security.
- Not engaging in substantial services in self-employment: If you are self-employed, these cannot be during months in which you claim benefits. To the SSA, substantial services are defined based on factors such as the number of hours worked and the type of work.
Read now: What is Enumeration at Entry and how does it work?
Application for Social Security benefits
To claim Social Security benefits, the SSA suggests applying online via their retirement application. Indeed, it is the fastest, most convenient way to apply, and you will also be able to check the status of your claim.
To help with concerns you may have regarding earnings affecting your benefit payout, SSA has handy resources. For more in-depth information, you could visit the Receiving Benefits While Working and Special Earnings Limit Rule SSA site pages.
Concluding thoughts
And the early retiree does not need to give up on their Social Security benefits. The special rule on earnings for the first year of retirement could ensure you get the maximum benefits while managing your finances efficiently. If you are unclear if you qualify or need help, SSA will help you sort it.
