Social Security earnings limit confusion - does income before retirement month count toward annual limit?
I'm planning to retire and start collecting Social Security in September 2025 at age 63 (before my FRA of 67). I'm confused about the earnings limit rules and getting mixed information. My main question is about how the SSA counts my pre-retirement earnings for that first year. Some resources say that when you retire mid-year, only the income earned AFTER you start collecting benefits counts toward the annual earnings limit ($22,320 in 2025). But others say ALL income for the year counts regardless of when you earned it. For context, I'll have earned about $75,000 by September when I plan to stop working completely. Will this trigger the earnings limit penalty even though I won't work after starting benefits? Or do they only look at my earnings after I start collecting? I've tried calling the SSA three times but keep getting disconnected after waiting over an hour. Any insights from people who've actually dealt with this would be SO appreciated!
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Freya Pedersen
You're dealing with what's called the Monthly Earnings Test for the first year of retirement. You're correct that only earnings AFTER you start collecting SS matter in your first year, as long as you're truly retired (meaning your earnings fall below monthly limits for any remaining months of that year). Basically, if you retire in September 2025 and don't earn over $1,860/month for the rest of 2025 (that's $22,320 ÷ 12), you won't lose any benefits regardless of how much you earned January-August. If you completely stop working in September when you claim, you'll be fine. The annual rule kicks in for 2026 and beyond.
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Ravi Gupta
•Thank you! That's such a relief. The SSA website wasn't clear about this specific situation. So to confirm - even though my YTD earnings by September will be above the annual limit, as long as I earn $0 after I start collecting, I won't face any benefit reduction? That seems too good to be true after all my worrying!
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Omar Hassan
no thats WRONG my sister got hit with this last year they counted ALL her income for the year even before she took SS!! she had to pay back like 4k$$ they took it right out of her checks this year
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Chloe Anderson
•That doesn't sound right. I'm wondering if your sister's situation was different somehow. Did she continue working after she started collecting? Or maybe she didn't properly report her retirement to SSA? When you first apply, you have to specifically tell them you're retiring and when, so they can apply the monthly earnings test.
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Diego Vargas
The previous commenter is correct about the Monthly Earnings Test. Here's the exact explanation from SSA: In the first year you retire, we count earnings differently. Specifically: 1. There's a special rule that applies to earnings for one year, usually the first year of retirement. 2. Under this rule, you can get a full Social Security payment for any whole month you're retired, regardless of your yearly earnings. 3. In 2025, a person under FRA is considered retired if monthly earnings are $1,860 or less. So your pre-September earnings won't matter as long as you properly notify SSA that you're retiring in September and don't earn above the monthly limit after that. Make sure when you apply that you clearly indicate your retirement date so they apply this rule.
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Ravi Gupta
•This is incredibly helpful - thank you! I didn't realize I needed to specifically tell them I'm retiring in my application. I was planning to just apply for benefits without mentioning my work situation changing. I definitely need to make sure this gets noted correctly.
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CosmicCruiser
Ugh, I had this exact same issue last year and couldn't get a straight answer from anyone at Social Security. Spent weeks trying to call them but could never get through - always disconnected or hours on hold. I finally used a service called Claimyr (claimyr.com) that got me connected to an SSA agent in under 10 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent confirmed what others are saying - they only count earnings after your retirement month in the first year, as long as you don't exceed the monthly limit. Made sure to note in my file that I was fully retiring on my start date.
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Omar Hassan
•does this claimyr thing actually work?? i cant get thru to ssa either about my widow benefits
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CosmicCruiser
•Yes, it worked for me. I was skeptical but was desperate after trying for weeks to get through. Got connected to an actual SSA agent who answered all my questions about the earnings test and retirement application.
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Anastasia Fedorov
My husband retired at 63 last yr & we went thru this. Its called the "first year rule" or "grace year rule" & means they only look at months AFTER u start collecting. But careful - they do check if ur really retired! No big payments from employer can come after or they might count those months as still working. We made sure his vacation payout came before he filed.
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Ravi Gupta
•Oh that's a good point about the vacation payout! I'll have about 6 weeks of unused PTO that will be paid out. I should make sure that happens before my retirement date in September.
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Sean Doyle
I thought ALL income counted no matter when you earned it! Now I'm worried I shouldn't have waited to file. I've been working part-time since January but delayed filing until June because I thought my January-May earnings would count against me. Did I mess up by waiting?? Is there any way to get retroactive payments for those months now?
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Diego Vargas
•Unfortunately, Social Security generally only allows retroactive benefits to be paid for 6 months maximum, and only if you're past Full Retirement Age. For early retirement (before FRA), benefits can only start from the month you apply, not earlier. So while you might have been able to collect for those earlier months without an earnings penalty, you generally can't go back and claim those months now. This is why understanding these rules before filing is so important.
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Chloe Anderson
THIS WHOLE SYSTEM IS DESIGNED TO CONFUSE PEOPLE!!! I spent 40+ years paying into Social Security and when I tried to understand these earnings rules, I got 3 different answers from 3 different SSA reps!!! One told me exactly what you heard - only earnings after filing count in first year. Then another told me it ALL counts but they give grace for some months. Then a third one gave me some complex formula. NO ONE KNOWS WHAT THEY'RE DOING THERE!!! Document EVERYTHING when you talk to them. Get names and direct numbers if possible. The left hand doesn't know what the right is doing.
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Ravi Gupta
•I'm definitely seeing why people get so frustrated. I'm generally good with financial matters but these rules are so poorly explained on their website. I'll make sure to document everything once I actually get through to someone. Thanks for the warning!
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Diego Vargas
To summarize what everyone has said and clarify any confusion: 1. In your FIRST year of retirement, SSA applies the Monthly Earnings Test: - They only count earnings in months AFTER you start receiving benefits - For 2025, you can't earn more than $1,860 in any month after claiming - If you earn $0 after claiming, you'll have no benefit reduction 2. Starting January 2026, the Annual Earnings Test applies: - They look at your total annual income - For 2026, you'll likely be subject to the $22,320 annual limit until you reach FRA 3. At Full Retirement Age: - The earnings test disappears completely - You can earn unlimited income with no benefit reduction Make absolutely sure when applying that you specify your retirement date so they apply the Monthly Earnings Test correctly.
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Ravi Gupta
•This is the clearest explanation I've seen! Thank you for breaking it down step by step. I'm going to print this out to reference when I actually apply. One last question - when I apply online, is there a specific field or section where I indicate my retirement date? Or should I just add it in the comments/remarks section?
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Diego Vargas
•In the online application, there's a section specifically about your work and earnings. They'll ask if you're still working, when you plan to stop, and your estimated earnings. Make sure to complete that section carefully and accurately. If you're worried, you can also add a note in the remarks section emphasizing your retirement date and that you'll have zero earnings after that date.
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