Special Rule as You Approach Full Retirement Age

[RobertS771047]

I found this online:

"If you are already receiving your retirement benefits, a special higher earnings limit applies in the calendar year you turn your full retirement age (66 for folks retiring today). If you will reach full retirement age in 2019, you may earn up to $3,910 per month without losing any of your benefits, up until the month you turn 66. But for every $3 you earn over that amount in any month, you will lose $1 in Social Security benefits. Beginning in the month you reach full retirement age, you become eligible to earn any amount without penalty."

I’ll turn 66, my full retirement age, in November of 2020.  Therefore, I would seem to qualify for this special rule, based upon my income (i.e., I'd have nothing held back due to income limitations), in January, 2020.  However, the first line:  “If you are already receiving your retirement benefits…” confuses me.  The rule applies only if you had already been taking retirement benefits?  I haven’t.  So does this mean that if I take retirement benefits in January 2020 at age 65, I won’t qualify and will be under the more restrictive work income limitations? 

Thanks to anyone who can help.  It is most appreciated.

[GailL1]

@RobertS771047 

The "Special Rule" is for people who have taken EARLY RETIREMENT (Before their FRA) and have been still working and possibly having some of their "early" retirement benefits reduced due to their earned income amount.  It applies ONLY when they (these early retireees) enter the year when they do reach their Full Retirement Age [FRA].

The Special Rule will not apply to you if you are going to file for your SS retirement benefits at FRA in November 2020.  For 2020, you can make whatever earned income that you can muster. 

If you want to retire (file for benefits) before your Nov. 2020 birthday,(that would be a mistake IMO) you can do that but SSA will deduct a small amount from your (forever) SS retirement check amount for filing even a few months early (early retirement).  But your income won't matter because SSA (Social Security Administration) doesn't know WHEN you made the earned income during 2020 so unless you self-report, your SS check will not be docked for any earned income limits.

Just file for benefits at your FRA - then keep working, earning and paying into the system - the skies the limit once you are FRA.  In fact, when you do stop working, your benefit will be recalculated to include those additional work credits and your benefit will increase - notify them when you decide to stop working or if you continue to work on and on and on - ask them to recalculate periodically depending upon how much you are making.

Here is a SS publication that explains it all -

Social Security.gov - Publication - How Work Affects Your Benefit 

Comprendo ?

[RobertS771047]

Gail,

Thank you so much for your time.  It is most appreciated and your reply  was very helpful.

“If you want to retire (file for benefits) before your Nov. 2020 birthday,(that would be a mistake IMO)…”

Regarding filing eleven moths before FRA, if I could I’d like to wait until 70.  But unfortunately, I could really use the money now.  I did an analysis.  If I file in January, I will lose approximately $114 a month  had I waited until November..  In order for the loss of the revenue to equal what I won’t be collecting if I don’t file in January from January through October will take approximately ten years.  Although I’d like to think otherwise, I’m skeptical I’ll make it that long judging by health considerations and the ages my parents passed away.   I never married so survivors’ benefits are not a consideration in the equation. 

“But your income won't matter because SSA (Social Security Administration) doesn't know WHEN you made the earned income during 2020 so unless you self-report, your SS check will not be docked for any earned income limits.”

I think I understand what you are referring to here.  Not only is there an annual income limitation (48.6K in 2020 under the special rule of my OP), there is also a monthly limitation.  Although I will not make over the annual limitation, I might (I have to figure that out) on occasions make over the monthly limitation.  (As most people these days are paid bi-weekly, then three times a year there are three pays in a month.  To my mind, this additional monthly limitation rule is just plain goofy.  What difference does it make when the money is earned as long as one is within the annual limitation?  Any which way they can get you, I guess.)  Is this was what you were referring to in my above quote from your reply, please?

Finally, the MAJOR point for me is that even though I have not received retirement benefits at any time prior to 2020, the special rule will apply to me if I file in January of 2020? I will be under the greatly higher income limitations despite how the site I copied and pasted the paragraph from in my OP makes it sound?  (It was not from SSA.  From the SSA publication to which you kindly linked, there is no mention of a requirement that one has to have already filed for benefits and have been collecting them before reaching the advent of one’s FRA year.  So is that correct?  I CAN file in January 2020 and qualify for the special rule since I will turn 66 in November?  I shall be under the higher income limitations? 

Thank you so much again!

Best regards

[GailL1]

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@RobertS771047 wrote:

Gail,

Thank you so much for your time.  It is most appreciated and your reply  was very helpful.

“If you want to retire (file for benefits) before your Nov. 2020 birthday,(that would be a mistake IMO)…”

Regarding filing eleven moths before FRA, if I could I’d like to wait until 70.  But unfortunately, I could really use the money now.  I did an analysis.  If I file in January, I will lose approximately $114 a month  had I waited until November..  In order for the loss of the revenue to equal what I won’t be collecting if I don’t file in January from January through October will take approximately ten years.  Although I’d like to think otherwise, I’m skeptical I’ll make it that long judging by health considerations and the ages my parents passed away.   I never married so survivors’ benefits are not a consideration in the equation. 

“But your income won't matter because SSA (Social Security Administration) doesn't know WHEN you made the earned income during 2020 so unless you self-report, your SS check will not be docked for any earned income limits.”

I think I understand what you are referring to here.  Not only is there an annual income limitation (48.6K in 2020 under the special rule of my OP), there is also a monthly limitation.  Although I will not make over the annual limitation, I might (I have to figure that out) on occasions make over the monthly limitation.  (As most people these days are paid bi-weekly, then three times a year there are three pays in a month.  To my mind, this additional monthly limitation rule is just plain goofy.  What difference does it make when the money is earned as long as one is within the annual limitation?  Any which way they can get you, I guess.)  Is this was what you were referring to in my above quote from your reply, please?

Finally, the MAJOR point for me is that even though I have not received retirement benefits at any time prior to 2020, the special rule will apply to me if I file in January of 2020? I will be under the greatly higher income limitations despite how the site I copied and pasted the paragraph from in my OP makes it sound?  (It was not from SSA.  From the SSA publication to which you kindly linked, there is no mention of a requirement that one has to have already filed for benefits and have been collecting them before reaching the advent of one’s FRA year.  So is that correct?  I CAN file in January 2020 and qualify for the special rule since I will turn 66 in November?  I shall be under the higher income limitations? 

---

NOTE:  I might be wrong but your reduction amount seems rather high to me based on the fact that you are only filing a few months earlier than FRA -   The reduction amount is:

https://www.ssa.gov/oact/quickcalc/early_late.html 

In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

Yes, filing before your FRA,  even a few months before, will reduce your full retirement benefit. 

As to your continuing to work and the earnings limit applicable in 2020 - yes, there is a monthly and annual limit and "officially" the special rule would affect you if you begin benefits before your FRA,  even a few months before. 

But since you will reach FRA a few months after you begin your early SS retirement, it is impossible for the SSA to know exactly when the income was earned - thus they rely on self-reporting and for you, this would only be for 2020.  The special rule actually is more for those who have filed for early benefits (age 62 - 65).  The special rule for them affects them a great deal more than it will affect you, if it affects you at all.

This SS publication explains this matter -

This is the 2019 edition so just insert 2020 where it reads 2019 -

Social Security.gov Publication: How Work affects Your Benefit 

It reads:

Should you report changes in your earnings?

We adjust the amount of your Social Security benefits in 2019 based on what you told us you would earn in 2019.

If you think your earnings for 2019 will be different from what you originally told us, let us know right away. . . . . .

If you need help in figuring your earnings, contact us. When you call, have your Social Security number handy.

I believe that this is the reason why you need not really be that concerned with self-reporting when filing for early retirement (a few months early) and reaching FRA in the same year -

The publication further reads:

Will you receive higher monthly benefits later if benefits are withheld because of work?

Yes. If some of your retirement benefits are withheld because of your earnings, your monthly benefit will increase starting at your full retirement age to take into account those months in which benefits were withheld.

Depending upon how much you might earn in 2020 - you could make up for some of your reduced (early filing) benefits.

The publication further reads:

Are there other ways that work can increase your benefits?

Yes. Each year we review the records for all Social Security recipients who work. If your latest year of earnings turns out to be one of your highest years, we refigure your benefit and pay you any increase due. This is an automatic process, and benefits are paid in December of the following year. For example, in December 2019, you should get an increase for your 2018 earnings if those earnings raised your benefit. The increase would be retroactive to January 2019

Read the linked SS publication -  You should be fine - Hope this helps.

[RobertS771047]

Gail,

Thanks much again!  You've been very helpful and it is appreciated.

Regarding what I would lose by filing in January instead of waiting until FRA in November, I certainly hope your isntincts in such matters are right!  I might have misread at my benefits estimates function at the SSA site.  Also, that was as of December instead of January.  It migth be a little elss then.  

All the best to you!

Bob

[GailL1]

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@RobertS771047 wrote:

Gail,

Regarding what I would lose by filing in January instead of waiting until FRA in November, I certainly hope your isntincts in such matters are right!  I might have misread at my benefits estimates function at the SSA site.  Also, that was as of December instead of January.  It migth be a little elss then.  

All the best to you!

Bob

---

You maybe right - here is a place to check it out if you know your PIA.

Look at this SS page and do the calculation at the bottom of the page - it will give you the % amount which you will receive if you start drawing 10 months before your FRA..

Social Security.gov - Early or Late Retirement? 

I put in these figures to get the result shown below - had to guess your day of birth.

Enter your birthday month/day/year:  11/15/1954

Enter the effective month and year for which you would like to begin receiving benefits:  01/2020

The result came back as this: 

You choose to receive benefits 10 months before you reach your normal retirement age. Your benefit will be 94.44 percent of your primary insurance amount (PIA).

Good Luck and you are welcome.

[RobertS771047]

Thanks again and good guess, verv close!  This sounds about right.  Best regards.  

[RobertS771047]

Gail,

Thank you so much for your time.  It is most appreciated and your reply was very helpful.

“If you want to retire (file for benefits) before your Nov. 2020 birthday,(that would be a mistake IMO)…”

Regarding filing eleven moths before FRA, if I could I’d like to wait until 70.  But unfortunately, I could really use the money now.  I did an analysis.  If I file in January, I will lose approximately $114 a month had I waited until November.  In order for the loss of the revenue to equal what I won’t be collecting if I don’t file in January from January through October will take approximately ten years.  Although I’d like to think otherwise, I’m skeptical I’ll make it that long judging by health considerations (though not critical at the moment) and the ages my parents passed away.   I never married so survivors’ benefits are not a consideration in the equation. 

“But your income won't matter because SSA (Social Security Administration) doesn't know WHEN you made the earned income during 2020 so unless you self-report, your SS check will not be docked for any earned income limits.”

I think I understand what you are referring to here.  Not only is there an annual income limitation ($48.6K in 2020 under the special rule of my OP), there is also a monthly limitation.  Although I will not make over the annual limitation, I might (I have to figure that out) on occasion make over the monthly limitation.  (As most people these days are paid bi-weekly, then three times a year there are three pays in a month.  To my mind, this additional monthly limitation rule is just plain goofy.  What difference does it make when the money is earned as long as one is within the annual limitation?  Any which way they can get you, I guess.)  Is this was what you were referring to in my above quote from your reply, please?

Finally, the MAJOR point for me is that even though I have not received retirement benefits at any time prior to 2020, the special rule will apply to me if I file in January of 2020? I will be under the greatly higher income limitations despite how the site I copied and pasted the paragraph  in my OP makes it sound?  (It was not from SSA.  From the SSA publication you kindly linked, there is no mention of a requirement that one has to have already filed for benefits and have been collecting them before reaching the advent of one’s FRA year.  So is that correct?  I CAN file in January 2020 and qualify for the special rule since I will turn 66 in November?  I shall be under the higher income limitations? 

Thank you so much again!

Best regards

Bob