Dear Anxious: Well I’m afraid I can’t offer you any obscure methods to avoid Social Security’s rules and regulations, but perhaps I can clarify some things that will help you manage the timing of your application for Social Security benefits. From what you’ve said, I assume you mean you plan to retire from your working career in September, but by that time you will have greatly exceeded Social Security’s annual earnings limit (which is $17,640 for 2019). Again, from what you’ve said, you wish to claim SS as soon as possible but you don’t want to lose any benefits because of exceeding the earnings limit. So, if you wish to claim SS as soon as you turn 62, you’ll be happy to know that there is a special rule that applies for your first year of collecting benefits before your full retirement age (66 ½ in your case).
That “first year rule” essentially says that if you start benefits in mid-year, earnings prior to the month your benefits start don’t count; instead you’ll be subject to a monthly earnings test for the remainder of that year, once your benefits have started. So in your case, your first month of eligibility for SS would be the month of October (you must be 62 for the entire month to be eligible for benefits), and your benefit payment for October would be paid the following month (the payment date will be either the 2nd, 3rd, or 4th Wednesday of the month, depending on the day of the month you were born). Then, starting with the month of October, if you do not have earnings from working that exceed $1,470 in any of the remaining months of 2019, your benefits will not be cut; but if you have earnings from working that exceed that monthly amount in any month for the rest of 2019, then you will not be entitled to SS benefits for that month. Exceeding the monthly limit by any amount (even by $1) will cause Social Security to take back the full benefit for that month. So, if your plan is to retire from your working career in September and depend upon your savings and investments for income, and if you claim Social Security as soon as you’re eligible in October and you have no further earnings from working, you’ll not suffer any loss of benefits in 2019.
But just as a caution, after 2019 you’ll still be subject to the annual “earnings test” because you’re claiming Social Security before you reach your full retirement age, and the annual earnings test will apply until the month that you reach your full retirement age (after that, there is no longer a limit to what you can earn). As for when you should apply for benefits, Social Security recommends that you apply 3 months before you wish your benefits to begin. When applying, you can specify the month you want your benefits to start, so if you wish that to be at age 62 simply specify October 2019 as your benefit start month. Applying prior to September and specifying October as your benefit start month will not expose you to any extra earnings limitations over those explained above.
The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed are the viewpoints of the AMAC Foundation’s Social Security Advisory staff, trained and accredited.