Social Security earnings limit confusion - annual $23,400 or monthly $1,950 if retiring mid-year at 62?

In your situation, SSA will apply the monthly grace period rule since you're retiring mid-year. For the remainder of 2025 after you retire, you can earn up to $1,950 per month without losing benefits. The annual limit doesn't apply to you this year because you're stopping substantial work mid-year. Your pre-retirement earnings of $48,000 won't affect your benefits as long as you stay under that $1,950/month after retirement. Make sure you actually STOP substantial work though - that means no more than $1,950/month for the rest of the year. If you go over even once in any month, you don't get benefits for that month. For 2026, you'll switch to the annual limit ($23,400 plus whatever COLA they add for next year), assuming you don't return to substantial work.

i thought SS always uses the yearly amount no matter when u retire?? my uncle lost benefits last year cuz he made too much before retiring. someone at SS told him the annual limit was all that mattered

When I retired at 63, I had to call Social Security THREE TIMES to get a straight answer about this exact issue!!! The first rep told me the annual limit applied no matter what, the second gave me some complicated formula, and the third FINALLY explained the monthly grace period rule correctly. It's INFURIATING how hard it is to get accurate information from them. I wasted HOURS on hold only to get contradictory information each time!!! How are we supposed to make proper retirement decisions when even THEY don't know their own rules???

just be super careful when they ask if you're retired or not. when i told them i was retiring in July last year, they asked if i "stopped substantial services" - those exact words. i said yes cuz i stopped my main job but was doing some consulting that paid like $900 a month. apparently that still counted as being retired for their monthly rule!

I'm going through the exact same scenario right now! The stress is unbelievable. Thanks for asking this question - I was about to post it myself. Just to clarify what I'm understanding: if I retire in September 2025, they'll only look at my earnings from September-December, and I can make up to $1,950 in each of those months without penalty? And all my earnings from January-August are completely ignored?

one more thing - if u mess up and earn too much in any month after retiring this year, u only lose benefits for THAT month, not the whole year. next year is when they start looking at the whole annual amount

This has been incredibly helpful, everyone. I think I have it straight now. For 2025 after I retire in August: - Only my post-retirement earnings matter (August-December) - I can earn up to $1,950 per month without penalty - If I go over in any month, I lose benefits just for that month - My $48,000 pre-retirement earnings don't count against me Then starting in 2026, I switch to the annual limit of $23,400 (plus whatever COLA they add). I feel like I can actually breathe now. Thank you all so much!

You've got it exactly right! I'm so glad this thread helped clarify things for you. The monthly earnings test is one of those Social Security rules that can be a lifesaver for people retiring mid-year, but it's not well-publicized and even some SSA reps don't explain it clearly. Just one small tip: when you file for benefits, be very clear about your retirement date and that you've "stopped substantial services" as of that date. Sometimes they'll ask you to fill out a form about your work cessation. Being precise about this helps ensure they apply the monthly test correctly. Best of luck with your retirement in August! It sounds like you've done your homework and can move forward with confidence.

As someone new to this community, I just wanted to say how incredibly helpful this thread has been! I'm 61 and facing a similar situation where my employer is offering early retirement packages, but I was terrified about the Social Security earnings rules. Reading through everyone's experiences has given me so much clarity. The distinction between the monthly earnings test in your first year vs. the annual limit in subsequent years is something I had never heard explained so clearly before. It's frustrating that this isn't more widely known - I've been stressing for months thinking my year-to-date earnings would automatically disqualify me from benefits if I retired mid-year. Thank you Sarah for asking the question, and thank you to everyone who shared their real-world experiences. This kind of peer-to-peer knowledge sharing is invaluable when navigating these complex government programs!

This conversation has been incredibly enlightening! I'm 63 and was laid off from my corporate job in February, but I've been doing some freelance work while deciding whether to file for Social Security now or wait. I had no idea about the monthly earnings test for mid-year retirees - I thought once you earned over the annual limit, you were out of luck for benefits that entire year. Reading through everyone's experiences, it sounds like if I officially "retire" (stop substantial services) and file for benefits, I could potentially earn up to $1,950/month from my freelance work for the rest of 2025 without losing benefits, even though I've already earned about $15,000 this year from my previous job plus freelancing. Can anyone confirm this applies to freelance/self-employment income too? I've been hesitant to file because I wasn't sure how they'd handle irregular 1099 income versus W-2 wages. The stress of trying to figure this out on my own has been overwhelming, so finding this community discussion feels like a lifeline!

This thread has been an absolute treasure trove of information! I'm 64 and have been agonizing over whether to retire early next month due to a toxic work environment that's affecting my health. Like so many others here, I was completely confused about how the earnings test works when you retire mid-year. The clarity everyone has provided about the monthly earnings test vs. the annual limit is incredible. I had been putting off retirement because I thought my year-to-date earnings (around $35,000) would automatically disqualify me from any Social Security benefits for the rest of 2025. Learning that they only look at post-retirement earnings using the $1,950 monthly limit changes everything for my decision-making process. What really strikes me is how this critical information isn't clearly communicated by SSA itself - the fact that multiple people here had to call repeatedly to get accurate answers is both frustrating and sadly not surprising. This community fills such an important gap in helping people understand these complex rules through real experiences rather than confusing government websites. Thank you Sarah for asking the original question, and thank you to everyone who shared their knowledge and experiences. This discussion has given me the confidence to move forward with early retirement knowing I understand the rules correctly!

As a newcomer to this community, I'm absolutely amazed by the depth of knowledge and support shared in this thread! I'm 62 and facing a potential early retirement situation due to company restructuring, and I had the exact same confusion as Sarah about how the earnings test works when retiring mid-year. Reading through everyone's experiences has been incredibly enlightening - especially learning about the monthly earnings test (grace year rule) versus the annual limit. Like many others here, I had been under the impression that once you exceeded the annual limit at any point during the year, you'd be ineligible for benefits for the entire year. Finding out that SSA only looks at post-retirement earnings using the monthly $1,950 limit for the remainder of your first retirement year is game-changing information! What's particularly valuable is hearing the real-world experiences from people like Jordan who had to call SSA multiple times to get accurate information, and others who've actually navigated this process successfully. It's both reassuring and concerning that even SSA representatives sometimes provide inconsistent answers about their own rules. This thread has given me the confidence to better plan my potential retirement timeline. Thank you to everyone who took the time to share their knowledge and experiences - this kind of peer support is invaluable when dealing with such complex government programs!

As someone who just joined this community specifically to understand Social Security rules better, I have to say this thread has been absolutely invaluable! I'm 63 and considering early retirement due to burnout, but I was completely overwhelmed by trying to understand the earnings test rules on my own. What strikes me most is how this discussion has revealed a critical gap in how SSA communicates these rules. The monthly earnings test for mid-year retirees seems like such an important provision - especially for people facing unexpected layoffs, health issues, or burnout who need to retire before their full retirement age but have already earned over the annual limit earlier in the year. I've been bookmarking responses throughout this thread because the practical insights from people who have actually navigated this process are worth their weight in gold. Learning that your pre-retirement earnings don't count against you once you officially retire mid-year, and that you can earn up to $1,950/month for the remainder of that year without penalty, completely changes my retirement planning calculus. Thank you Sarah for asking the question that so many of us needed answered, and thank you to everyone who shared their experiences and knowledge. This kind of community support makes such a difference when trying to navigate complex government programs!