Social Security earnings limit confusion at 63 - monthly vs. yearly limits when retiring mid-year

I had NO idea about this 'grace year' thing!! The SSA website makes it seem like if you earn too much AT ALL during the year, they just start taking money away. When I filed last year they never mentioned anything about monthly limits for the first year. Their website is so confusing and the phone lines are useless - I spent 4 hours on hold last week and got disconnected TWICE!

I went thru EXACTLY this situation! Yes, you'll get your full amount for months after you retire as long as you don't go back to work or earn over the monthly limit for those months. But you MUST tell them you've retired - it doesn't happen automatically. I had to call SSA and tell them my retirement date. Try using Claimyr (claimyr.com) to reach a Social Security rep without waiting hours on hold. Their service connects you to a real SSA agent usually within 20 minutes. I was super skeptical but it actually worked! Watched their video demo (https://youtu.be/Z-BRbJw3puU) to see how it works before trying. Totally worth it for something this important.

This is incorrect. The Social Security Administration definitely has special rules for the first year you claim benefits. It's called the "Grace Year Rule" or sometimes the "First Year Rule." In your brother's case, he either (1) didn't notify SSA that he had retired mid-year, (2) continued earning over the monthly limit after claiming benefits, or (3) wasn't eligible for the monthly earnings test for some other reason. The official SSA rules state: "In the first year of retirement, the Social Security Administration will use a monthly test." This monthly test applies ONLY to months AFTER you've retired and only in that first calendar year of benefits.

You don't need to visit the office in person. You can notify SSA about your retirement and expected earnings by phone. Just make sure to get the name of the representative you speak with and ask for a confirmation number or follow-up letter documenting the information you provided. Keep in mind you'll need to provide: - Your expected last day of work - Estimate of your earnings up to retirement - Confirmation you won't be earning over the monthly limit after retirement They may also ask for your most recent paystub to verify earnings.

I've thought about waiting too, but I've done the math and even with the reduction, starting at 63 makes sense for my situation. I'll have other income sources besides Social Security. I just want to make sure I understand how much I'll actually get those first months so I can plan accordingly. Thanks for sharing your perspective though!

The earnings test isn't really a penalty - you actually get the money back later. When you reach full retirement age, SSA recalculates your benefit amount as if you hadn't claimed early for any months where benefits were withheld. This results in a higher monthly payment after FRA. I agree the rules could be communicated more clearly though. The Publication No. 05-10069 "How Work Affects Your Benefits" explains the first-year rule, but it's not prominently featured on their website.

Your summary is spot on. And to answer your question - if you exceed the monthly limit for just one month in your first year, you'd only lose benefits for that specific month, not the entire year. After your first year on benefits, they switch to the annual test, where only your total yearly earnings matter, not which specific months you earned the money.

No, that's not true! I thought the same thing but when my husband reached his FRA last year, his benefit actually increased. The SSA rep explained they adjusted his payment to account for the months they withheld benefits due to earnings. It's not a penalty - it's more like they're recalculating your benefits as if you claimed later. Don't expect them to explain this clearly though - you have to specifically ask about it. The whole system feels designed to confuse people!