Social Security earnings limit confusion - part-time school bus driver with 12-month pay schedule

Great question about the earnings test! Social Security only cares about when you RECEIVE the income, not when you earned it. So if you're getting $2,200 monthly checks throughout all 12 months, they'll count the full $26,400 for the annual earnings test (which is $22,320 for 2025 if you're under FRA the whole year). Your wages count in the year you receive them, regardless of when the work was performed. As for when to start collecting, that entirely depends on your financial situation, health, and expected longevity. Starting at 62 means permanently reduced benefits (about 30% less than FRA), but you collect for longer.

same exact situaton for me!! been driving for 12 yrs now. I decided to wait until FRA (66+8mo for me) becuz the earnings limit is a HUGE headache. they take $1 for every $2 you go over! my brother started early and regrets it big time, always worrying if he worked too much overtime. if u can wait, I would. but its your choice obvs

This is one of those weird SSA rules that catches people by surprise. For the annual earnings test, it's when you RECEIVE the money that counts, not when you earned it. I actually had this exact situation when I drove a school bus! If your school offers a 9-month payment option, that might help you stay under the limit for 3 months of the year. But honestly, if you're going to keep working at that income level, waiting until your FRA to claim is probably smarter - then there's no earnings test at all.

Everyone's giving advice about the earnings test, but NOBODY'S mentioned that school bus drivers in many states have something called the Windfall Elimination Provision (WEP) that might reduce your Social Security!!! Did your school district pay into Social Security or do they have a separate pension system????

I tried calling SSA for MONTHS to get answers about my earnings after I retired from teaching, but couldn't get through. Finally used a service called Claimyr (claimyr.com) that got me connected to an agent in 20 minutes! They have a video showing how it works: https://youtu.be/Z-BRbJw3puU. The agent explained exactly how my earnings would affect my benefits. Worth it to get the right info directly from SSA.

As someone who's been through this exact scenario, here's my two cents on WHEN to claim: Look at your overall financial picture. If you need the money now, claiming at 62 might make sense despite the reduction. BUT, if you can wait until FRA, not only will you get your full benefit amount, but you'll also completely avoid the earnings test headache. Remember: 1) Every year you wait past 62 increases your monthly benefit by roughly 8%, 2) The earnings limit goes away entirely at FRA, and 3) Your benefit amount affects survivor benefits if you're married. Don't just focus on the short-term!

Important clarification on the earnings test: Social Security uses a complex formula to determine how much to withhold when you exceed the annual limit. They don't necessarily withhold benefits evenly throughout the year. If you're going to earn more than the annual limit ($22,320 for 2025 if under FRA the whole year), they might withhold several full months of benefits rather than reducing each month a little bit. This can create cash flow challenges if you're not prepared for it. You can find the exact formula on the SSA website or by calling them directly.

I just remembered something else that might help u!! If ur gonna keep working can u maybe pick up some summer routes?? My district pays more for summer school routes AND then u would actually be working those summer months too so it feels more fair with the earnings test thing

Just wanted to add one more thing that might help with your decision timing - if you do decide to start collecting early, you can actually suspend your benefits later if your financial situation changes! Once you reach FRA, you can voluntarily suspend your benefits and earn delayed retirement credits (8% per year) until age 70. So starting at 62 isn't necessarily a permanent decision if you find you don't really need the money or want to maximize your monthly benefit later. Of course, you'd still deal with the earnings test headache until FRA, but it's good to know you have options. Also, definitely confirm with your payroll whether you're paying FICA taxes - that WEP concern someone mentioned earlier is real but only applies if you have a pension from non-Social Security covered employment.

One thing I haven't seen mentioned yet is that you might want to consider doing a "test run" with Social Security's online calculator at ssa.gov/benefits/retirement/estimator.html. You can plug in different claiming ages and see exactly how much your monthly benefit would be at 62 vs FRA vs 70. For your specific earnings situation, you could also call SSA and ask them to do a hypothetical calculation showing what would happen if you claimed at 62 with your current $26,400 annual income. They can tell you exactly how many months of benefits you'd lose due to the earnings test. This might help you decide if claiming early is worth it or if waiting until FRA makes more financial sense in your particular case.

Welcome to the community! Yes, when you call SSA for hypothetical calculations, they can walk through the earnings test math, but the level of detail varies by representative. The basic formula is: for every $2 you earn over the annual limit ($22,320 for 2025), they withhold $1 in benefits. However, the timing strategy you mentioned is real - SSA typically withholds benefits starting from January and continues until they've recovered the full amount owed. So if you owe $3,000 in withheld benefits and your monthly benefit is $1,500, they'd withhold your January and February payments entirely. This is why some people try to concentrate their earnings later in the year if possible. For school bus drivers with that 12-month pay schedule though, it's trickier since the income is spread evenly. The monthly earnings test that someone mentioned earlier can be helpful in your first year of claiming - you can earn any amount in months before you claim, then only the months after claiming count toward the limit.

As a newcomer to this community, I'm finding this discussion incredibly valuable! I'm in a similar situation trying to navigate Social Security decisions. One thing I wanted to add that might help the original poster - you mentioned money being tight, which is totally understandable. Have you looked into whether your state offers any additional benefits or programs for school transportation workers? Some states have specific retirement incentives or healthcare benefits that could factor into your timing decision. Also, since you're dealing with a 12-month pay schedule for 9 months of work, you might want to ask your HR department if they offer any flexibility in how your pay is distributed - not all districts do, but some will let you choose between 9-month or 12-month payment schedules. This could potentially help with that earnings limit issue if you have the option to switch to 9-month payments when you start collecting Social Security. Just another angle to consider alongside all the excellent advice everyone has already shared!

As someone new to this community, I wanted to share something that might help with your decision-making process. I recently discovered that Social Security has a "do-over" rule called withdrawal of application that could be relevant. If you claim benefits and then within the first 12 months decide it was a mistake (maybe because the earnings test is creating too much hassle), you can actually withdraw your application, pay back what you've received, and it's like you never filed at all. You can only do this once in your lifetime, but it's another safety net to consider. That said, given your income level of $26,400 annually, you'd be about $4,080 over the 2025 earnings limit, which means they'd withhold roughly $2,040 in benefits. Depending on what your monthly Social Security benefit would be, this could mean losing 1-2 full months of payments. You'd need to weigh whether getting 10-11 months of reduced benefits at age 62 is better than waiting for full benefits at your FRA with no earnings restrictions. The math really depends on your specific benefit amount and how long you plan to keep working.

As a newcomer to this community, I've been following this discussion with great interest since I'm facing similar Social Security timing decisions. One thing I wanted to add that hasn't been mentioned yet is the potential impact on spousal benefits if you're married. If your spouse is planning to claim spousal benefits based on your work record, your decision about when to file could affect their options too. Spousal benefits are calculated based on your Primary Insurance Amount (what you'd get at full retirement age), so filing early and getting a reduced benefit doesn't directly reduce what your spouse could receive. However, your spouse can't claim spousal benefits until you've actually filed for your own benefits. This might be another factor to consider in your timing decision, especially if your spouse is older or has health issues. The school bus driver earnings situation is tricky enough without adding spousal benefit coordination to the mix, but it's worth understanding all the pieces of the puzzle before making your decision!

As a newcomer to this community, I'm really impressed by how knowledgeable and helpful everyone is here! I'm facing a similar situation to Madison with timing Social Security benefits, and this thread has been incredibly educational. One thing I wanted to ask about that might help others in similar situations - has anyone dealt with the situation where your employer offers both 9-month and 12-month pay options, but switching affects your eligibility for summer health insurance coverage? I'm wondering if the potential savings from avoiding the earnings test could be offset by having to pay for private health insurance during those summer months when you're not receiving paychecks. It seems like there are so many interconnected factors to consider beyond just the Social Security earnings test - health insurance, pension contributions, and even things like qualifying for unemployment benefits during summer breaks if you're laid off rather than continuing to receive spread-out paychecks. Has anyone navigated these kinds of trade-offs when making their Social Security timing decision?