Social Security earnings limit confusion - turning 62 in July with $50K income before applying in August

You're dealing with something called the Retirement Earnings Test (RET). Since you're turning 62 this year and would be applying before your Full Retirement Age, earnings over the annual limit can reduce your benefits. For 2025, the annual limit is $22,560 if you're under FRA the whole year. Since you've already earned about $50K by July, you're over the limit by roughly $27,440. Social Security typically withholds $1 in benefits for every $2 you earn over the limit. The key question is whether you completely stop working when you start benefits. If you do stop completely in July, you might be eligible for the monthly earnings test for the rest of the year instead of the annual test. Under the monthly test, you can receive benefits for any month you don't earn over $1,880 (1/12 of the annual limit) AND don't perform substantial services in self-employment. I went through this when I retired at 63. The monthly test saved me from losing benefits despite having high earnings earlier in the year.

The previous poster is mostly right, but there's a crucial detail you need to understand about the monthly earnings test. When you first claim benefits in a year where you've already worked, SSA applies what's called the "Grace Year" rule. This allows you to use the monthly earnings test instead of the annual test in your first year of retirement, REGARDLESS of how much you've already earned that year. Here's what matters: 1. You must be fully retired when you claim (no substantial work) 2. Your monthly earnings must be under the monthly limit ($1,880 in 2025) for any month you want to receive benefits So if you completely stop working in July, and apply for benefits to start in August, you SHOULD be eligible for full benefits for August-December since you'd have $0 earnings in those months. I recommend getting this in writing from SSA when you apply. Make sure they understand you're fully retiring, and ask specifically about the Grace Year provision and monthly earnings test.

Just adding my experience - I ran into this EXACT situation last year when I turned 62 in May. Had already made like $42k by then, and was freaking out about the earnings test. What saved me was knowing about the "grace year" provision the previous person mentioned. When I applied, I specifically mentioned I was fully retiring and asked them to apply the monthly earnings test instead of the annual test. The claims specialist knew exactly what I was talking about and documented it in my claim. My benefits started the month after I retired with ZERO reduction despite my high earnings earlier in the year. One tip: when you go to apply, bring a copy of your resignation letter or something from your employer confirming your retirement date. This helps prove you're genuinely retiring and not just reducing hours.

I tried for 3 WEEKS to get someone at Social Security on the phone about this exact issue!!! Kept getting disconnected or waiting for hours. FINALLY used a service called Claimyr (claimyr.com) that got me connected to an agent in under 15 minutes. Worth every penny because the agent confirmed everything people are saying here - the monthly earnings test applies in your first year claiming benefits. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU My advice: don't wait until January unless you want to. If you're fully retiring in July, you should be able to get your benefits starting in August without reductions from your prior earnings. Just make sure the SSA representative understands your situation correctly when you apply.

everyone here is forgetting that you gotta apply at least 3-4 months before you want benefits to start!!!! the backlog is crazy right now. if you want benefits in august you should have applied already tbh

I just realized something important for your situation - if you're turning 62 in July, remember that you aren't eligible for benefits until you've been 62 for a FULL month. So if your birthday is anytime in July, your first eligible month would be August anyway. This actually works perfectly with what you're planning. You could submit your application right now (you can apply up to 4 months before eligibility) and specify August as your benefit start month. Then make sure your last day of work is in July. This way, you'll be fully retired before your benefits begin, making it very clear that the monthly earnings test should apply.

I don't want to throw a wrench in your plans, but have you considered waiting until your Full Retirement Age to avoid the earnings test altogether? Taking benefits at 62 means a PERMANENT reduction of about 30% compared to your full retirement benefit. That's a BIG hit to take for the rest of your life! Obviously, everyone's situation is different, and sometimes taking early benefits makes sense. But if you've been making $50K by mid-year, it sounds like you're earning good money. Have you run the numbers to see if working a few more years might significantly increase your lifetime benefits?

My brother had this exact problem!!!! He retire at 62 and 3 months but had already made like $55k that year. SS tried to take away some of his checks but he fought them and showed he wasnt working anymore and they gave him all his money. Just make SURE you tell them your COMPLETLY stopping work not just reducing hours. And GET IT IN WRITING!!!!!!!

I went through almost the exact same situation two years ago! Turned 62 in June, had earned about $48K by then, and was terrified about the earnings test. Here's what I learned that might help you: The key is understanding that SSA has two different earnings tests - the annual test and the monthly test. In your first year of retirement (called the "grace year"), you can use whichever test is MORE FAVORABLE to you. Since you're planning to completely stop working in July, you'd qualify for the monthly test starting in August. Under this test, as long as you earn less than $1,880 per month AND don't perform substantial work, you get your full benefit for that month - regardless of what you earned earlier in the year. When I applied, I made sure to emphasize three things: 1. I was COMPLETELY retiring (not just reducing hours) 2. I wanted them to apply the monthly earnings test 3. I brought documentation of my retirement date The SSA representative initially tried to apply the annual test, but when I mentioned the "grace year provision" and "monthly earnings test," she knew exactly what I was talking about and corrected my file. Bottom line: Don't wait until January if you don't want to. If you're truly retiring in July, you should be able to start benefits in August without any reduction from your $50K in prior earnings. Just make sure the SSA rep understands your situation correctly!

This is incredibly helpful information, everyone! I'm in a similar situation to Sean - turning 62 next month and worried about the earnings test. One question I have: when you mention getting it "in writing" from SSA, what exactly should I be asking for? Is there a specific form or document they provide, or should I just request written confirmation of how they're applying the earnings test to my case? Also, has anyone had experience with SSA initially applying the wrong test and then having to correct it later? I'm worried about potential delays or complications if they don't handle it correctly from the start. Thanks so much for sharing your experiences - this has been more helpful than hours of trying to decipher the SSA website!

I'm dealing with a very similar situation right now! Turning 62 in June and have already earned about $47K this year. After reading through all these responses, I feel so much more confident about applying for benefits. The "grace year" provision that several people mentioned seems to be the key - I had never heard of this before and it's not clearly explained on the SSA website at all. It sounds like as long as you completely stop working (not just reduce hours), you can use the monthly earnings test in your first year of claiming benefits. One thing I'm curious about - for those who successfully used this provision, did you apply online or did you go to a local office? I'm wondering if applying in person might help ensure they understand the situation correctly from the start, rather than having to correct mistakes later like some people mentioned. Sean, it sounds like you've got great advice here. Based on everyone's experiences, it seems like you should be able to start benefits in August without any reduction from your $50K in prior earnings, as long as you're truly retiring completely in July. Good luck!

I just went through this exact situation last year! Turned 62 in August and had earned around $52K by then. I was absolutely panicking about the earnings test until I learned about the grace year provision that others have mentioned here. The key thing that helped me was understanding that SSA has specific terminology they use. When you apply, make sure to use these exact phrases: - "Grace year provision" - "Monthly earnings test instead of annual earnings test" - "Complete retirement" (not partial or reduced work) I applied in person at my local SSA office and brought a letter from HR confirming my last day of work. The representative initially started calculating with the annual test, but when I mentioned the grace year provision, she immediately knew what I was talking about and switched to the monthly test. Result: I got full benefits starting the month after I retired, with zero reduction despite my high earnings earlier in the year. The monthly test only looked at my $0 earnings from my retirement month forward. One more tip: If you apply and your initial award letter shows any reduction, call immediately. Some reps aren't familiar with this provision, but supervisors usually are. Don't accept a reduced benefit if you've truly stopped working completely!

I've been following this thread closely because I'm in a very similar situation - turning 62 next month and trying to figure out the best timing for retirement benefits. Based on all the excellent advice shared here, I wanted to summarize what seems to be the key takeaways for anyone else dealing with this: 1. **The "Grace Year" provision is crucial** - In your first year of claiming benefits, you can use the monthly earnings test instead of the annual test, regardless of prior earnings that year. 2. **Complete retirement is essential** - You must be fully retired (not just reducing hours) to qualify for the monthly earnings test. 3. **Use specific terminology** when applying - Mention "grace year provision" and "monthly earnings test" so the SSA rep knows exactly what you're requesting. 4. **Apply in person if possible** - Several people mentioned that online applications defaulted to the annual test, requiring corrections later. 5. **Bring documentation** - A retirement letter or HR confirmation of your last day of work helps prove complete retirement. 6. **Review your award letter carefully** - If it shows reductions when you've completely stopped working, call immediately to have it corrected. Sean, it really sounds like you should be able to start benefits in August without any penalty from your $50K in prior earnings, as long as you completely stop working in July. The grace year provision seems to be designed exactly for situations like yours! Has anyone here dealt with spousal benefits in a similar situation? My spouse is a few years younger and I'm wondering if there are any timing considerations I should be aware of.

As someone who recently navigated this exact situation, I want to emphasize how important it is to be persistent and advocate for yourself with SSA. I turned 62 last September and had earned about $48K by my retirement date in August. The first two representatives I spoke with had completely different interpretations of the earnings test rules - one said I'd face major reductions, another said I'd be fine. It wasn't until I spoke with a supervisor and specifically mentioned the "grace year provision" and "monthly earnings test" that I got consistent, accurate information. Here's what I learned that might help others: **Document everything** - I kept notes of every phone call, including the representative's name, date, and what they told me. This was crucial when I had to call back to correct my initial award. **Know your rights** - The grace year provision isn't some obscure loophole - it's a legitimate SSA policy designed exactly for people transitioning from work to retirement mid-year. Don't let anyone tell you otherwise. **Be prepared for inconsistency** - SSA representatives vary widely in their knowledge of these special provisions. If something doesn't sound right, ask to speak with a supervisor or call back to get a second opinion. **Timeline matters** - Make sure your complete work cessation happens BEFORE your benefit start month. Even one day of work in your benefit start month can complicate things. Sean, based on your description, you should absolutely be able to start benefits in August without any reduction from your $50K prior earnings. Just make sure you completely stop working in July and emphasize the grace year provision when you apply. Don't let them intimidate you into waiting until January if that's not what you want to do!

This thread has been incredibly helpful! I'm turning 62 in September and have been absolutely stressed about this same earnings situation. Reading everyone's experiences with the grace year provision has been a game-changer. I had no idea that SSA had these two different earnings tests, and like many others here, I was getting conflicting information when I called. One rep told me I'd definitely face reductions if I earned more than the annual limit before applying, but after reading all your experiences, I now understand that the monthly earnings test should apply in my first year if I completely stop working. The specific terminology people have shared is gold - "grace year provision" and "monthly earnings test" seem to be the magic phrases that help SSA reps understand exactly what you need. I'm definitely going to apply in person rather than online based on the feedback here. One thing I'm still trying to understand - for those who successfully used this provision, how long did it take from application to receiving your first benefit payment? I know there can be processing delays, but I'm trying to plan my finances around when the payments might actually start coming in. Sean, it really sounds like you're in great shape to start benefits in August without any penalties from your prior earnings. This community has provided such clear guidance - I wish the SSA website was this helpful!

This thread has been absolutely invaluable! I'm in almost the exact same boat - turning 62 in August and will have earned around $45K by then. I was terrified about the earnings test until I read about the grace year provision here. What really struck me is how many people got different answers from SSA representatives initially. It seems like this monthly earnings test option isn't widely known even among their own staff! The fact that multiple people had to correct their initial awards is concerning but also reassuring that it can be fixed. I'm definitely planning to apply in person now and will be armed with all the right terminology: "grace year provision," "monthly earnings test," and "complete retirement." I'll also bring my resignation letter as documentation. One question for those who've been through this - did any of you have issues with direct deposit setup or other administrative details that might cause delays in receiving that first payment? I want to make sure I have everything ready to go so there are no unnecessary complications. Sean, it really sounds like you've got a clear path forward. Based on everyone's experiences, starting benefits in August after completely stopping work in July should work perfectly with the grace year provision. Thanks to everyone who shared their stories - you've probably saved dozens of people from making costly timing mistakes!