Social Security earnings limit confusion - monthly vs. annual when starting mid-year?

The earnings test is both annual and monthly. For 2025, the annual limit is $23,100 if you're under FRA the whole year. BUT, there's also a monthly test for the first year you claim benefits. Here's how it works: - For January-April (before benefits start), those earnings don't count toward any limit - Starting in May (when benefits begin), you face a monthly limit of $1,925 for each month for the rest of 2025 - If you earn over $1,925 in any month from May-December, you won't get benefits for that specific month - In 2026 and later years, only the annual limit applies So yes, after your first year, you could earn $3,000 some months and $500 others as long as your annual total stays under the limit.

My sister went thru this last yr. Its sooooo confusing!! The SSA website is TERRIBLE at explaining this stuff. I think they look at monthly earnings in the begining but not sure...

There's a special rule for the first year you retire. In your case, for 2025: - Earnings from January-April aren't subject to any limit since you're not receiving benefits - From May-December, you'll be subject to the monthly limit ($1,925) - If you earn under $1,925 in any month from May-December, you'll get your full benefit for that month regardless of your total annual earnings - If you earn over $1,925 in any month from May-December, you won't get benefits for that specific month Starting in 2026, they'll only use the annual limit test, and you can distribute your earnings however you want throughout the year as long as you stay under the annual limit. See: https://www.ssa.gov/benefits/retirement/planner/rule.html

I went through this nightmare last year! Had to call SSA six times because I kept getting different answers every time! The last rep finally explained that it's BOTH monthly and annual in your first year. I spent HOURS on hold trying to get someone who could explain it clearly. If you're having trouble reaching them, check out Claimyr.com - it got me through to a real person in about 15 minutes instead of waiting for hours. They have a video demo showing how it works: https://youtu.be/Z-BRbJw3puU Saved me from losing my mind on hold music!

The 'grace year' monthly rule is CRITICAL to understand and almost nobody gets it right! In your first year of retirement (2025 for you), here's *exactly* how it works: → Any month you earn OVER $1,925 AND receive benefits = No benefit payment for that month → Any month you earn UNDER $1,925 = You get your full benefit, EVEN IF your total annual earnings exceed $23,100 This means if you earn $5,000 each month Jan-April (before benefits), then stay below $1,925 each month May-Dec, you'll get FULL BENEFITS for May-Dec despite earning way over the annual limit ($23,100). This is the 'grace year' rule that even many SSA employees get wrong.

I think everybodys mixing up SSI and SSDI here? Don't they have different rules??

my husbands on SS to and he said u can earn $1925 each month. its monthly not yearly they told him when he signed up

Thanks everyone for the helpful explanations! To summarize what I understand now: 1. For 2025 (my first benefit year), I have a special "grace year" rule: - Jan-April earnings don't count since I'm not getting benefits yet - May-Dec I need to stay under $1,925 each month to get benefits for that month 2. Starting in 2026, only the annual limit matters ($23,100 plus whatever COLA increase), and I can distribute my earnings however I want throughout the year. This makes planning so much easier! I'll keep my earnings under $1,925 monthly starting in May 2025, then in 2026 I can be more flexible with how I schedule my work.

Just wanted to add one more important detail that might help with your planning - make sure you understand what counts as "earnings" for the earnings test. It's specifically wages from employment or net earnings from self-employment. Things like pensions, 401k withdrawals, investment income, rental income, etc. don't count toward the limit. Also, if you're planning to work part-time or consulting, keep detailed records of your monthly earnings. SSA typically gets your earnings info from your tax returns, but they may ask for pay stubs or other documentation if there are questions about specific months during your grace year. Good luck with your retirement planning!

This is such valuable information! I'm in a similar situation - planning to start benefits at 62 next year. One question I have about the grace year rule: if I have a seasonal job where I might earn $3,000 in some months and $0 in others, would I lose benefits for just those high-earning months, or would it affect my benefits for the entire year? Also, does anyone know if the monthly earnings test applies to the month you actually receive the wages, or the month you earned them? Like if I work in December but don't get paid until January, which month does it count toward? Thanks for all the detailed explanations - this thread has been more helpful than my last three calls to SSA combined!

This thread has been incredibly helpful! I'm also approaching retirement and had no idea about the grace year rule. One follow-up question - what happens if you accidentally go over the monthly limit in your first year? Do you have to pay back the benefits immediately, or does SSA just withhold future payments? Also, I'm curious about the transition from monthly to annual limits. In 2026, when Maya switches to the annual limit system, does SSA automatically make this change, or do you need to notify them somehow? Thanks to everyone who shared their experiences - this is exactly the kind of real-world information that's so hard to find elsewhere!

This has been such an enlightening discussion! As someone who's been helping family members navigate Social Security for years, I want to emphasize how important it is to document everything during your grace year. Here's what I've learned from experience: Keep a simple spreadsheet tracking your monthly earnings from May 2025 forward. Include the dates you worked, amounts earned, and when you were paid. This will be invaluable if SSA ever questions your earnings or if you need to verify which months you should have received benefits. Also, don't panic if you accidentally go slightly over $1,925 in a month - it happens! The key is catching it early and understanding you'll just lose that one month's benefit, not your entire eligibility. One more tip: if you're doing contract or freelance work, be extra careful about how you track earnings versus when payment is received. The "when earned" rule can be tricky with irregular income streams. Maya, it sounds like you've got a solid plan now. The grace year rule is definitely one of Social Security's best-kept secrets!

Welcome to the community, everyone! As someone who recently went through this exact process myself, I can confirm that Maya's summary is spot-on. The grace year rule was a complete game-changer for my retirement planning. One thing I'd add from my experience: if you're planning to do any consulting or part-time work, consider structuring your contracts to align with the monthly limits during that first year. I was able to negotiate payment schedules with clients to stay under $1,925 per month, which meant I could actually earn more overall while still receiving full benefits. Also, don't underestimate how helpful it is to have everything in writing from SSA. When I started my benefits, I asked for written confirmation of my benefit start date and the applicable earnings limits. It saved me a lot of stress later when I had questions. The documentation tips from Oliver are absolutely crucial - I learned that the hard way when SSA requested pay stubs for three specific months where my earnings were close to the limit. Having detailed records made that process painless instead of a nightmare.

This thread has been incredibly informative! As a newcomer to this community, I'm amazed by how much clearer everyone has made this topic compared to the official SSA resources. I wanted to add one point that might help others in similar situations: if you're planning to start Social Security mid-year like Maya, it's worth considering how this timing affects your overall tax situation too. Since you'll have earnings from January-April that don't count toward the Social Security earnings test, but they'll still be part of your taxable income for the year, it's important to factor this into your tax planning. Also, I've noticed several people mention getting conflicting information from different SSA representatives. From what I've learned in other government benefits discussions, it can be helpful to reference the specific SSA publication numbers when you call - like asking specifically about the "first year of retirement" rule in SSA Publication 05-10069. Sometimes having the exact publication reference helps ensure you're talking to someone who knows the specific rule you're asking about. Thanks to everyone who shared their experiences - this community is such a valuable resource for navigating these complex systems!

As someone new to this community, I'm incredibly grateful for how clearly everyone has explained this! The grace year rule is something I never would have understood from the SSA website alone. I wanted to share a resource that might help others - the SSA's Annual Statistical Supplement has historical earnings limit data that can be helpful for long-term planning. You can see how the limits have increased over time, which gives you a sense of what to expect for future years. Also, for anyone dealing with self-employment income during their grace year, remember that it's your *net* self-employment earnings that count toward the limit, not your gross receipts. So if you're doing consulting work, you can deduct legitimate business expenses before calculating whether you've exceeded the $1,925 monthly limit. Maya, your planning approach sounds perfect - staying under the monthly limits in 2025, then having more flexibility with the annual limit starting in 2026. The documentation suggestions from others here are spot-on too. I keep a simple monthly log and it's been invaluable for tracking everything clearly. This discussion has been more helpful than my last two visits to the local SSA office combined!

As a newcomer to this community, I'm blown away by how helpful and detailed everyone's responses have been! This thread has cleared up so much confusion for me as someone who's also planning to start Social Security benefits before FRA. I wanted to add one point that might help others - if you're working with an employer during your grace year, it's worth having a conversation with HR or payroll about your situation. Some employers can be flexible about timing things like bonuses or overtime to help you stay under the monthly limit. Obviously this isn't always possible, but it's worth asking. Also, I've learned from reading other discussions that if you do end up owing money back to SSA due to excess earnings, they typically recover it by withholding future benefits rather than demanding immediate repayment. This can help with cash flow planning, though obviously it's better to stay under the limits in the first place. Maya, thanks for starting this discussion - it's been incredibly educational for those of us navigating this complex system! The clarity everyone has provided here is exactly what makes online communities so valuable.