Social Security earnings limit question: Do annuity payments count against SS income limit before FRA?
I'm really confused about what counts toward the SS earnings limit. I'm currently 63 and started collecting Social Security early at 62 (I know, probably should have waited). I've got an annuity that will start paying out soon, and the yearly distribution will be around $19,500, which seems pretty close to the annual earnings limit for SS recipients under FRA. My full retirement age is in about 2 months, but I'm worried about triggering the earnings test and having my benefits reduced. Does anyone know if annuity income counts as "earned income" for the Social Security earnings limit? Or is it only wages from actual work that count? I've tried calling SSA three times but keep getting disconnected after waiting forever.
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Klaus Schmidt
Good news! Annuity income is NOT considered earned income for Social Security earnings limit purposes. The earnings limit only applies to wages from employment or net earnings from self-employment. Annuity payments, interest, dividends, pension payments, investment earnings, and other government benefits do not count toward the earnings limit. So you can receive your annuity payments without worrying about your SS benefits being reduced.
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Esmeralda Gómez
•Thank you so much! That's a huge relief. I was really stressing about this. Do you know if I need to report the annuity income to SSA at all, even if it doesn't count toward the limit?
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Aisha Patel
Annuities don't count! I was worried about the same thing last year with my 403b. Only actual job income counts against the limit. Once you hit FRA (congrats on being so close!), the earnings limit goes away completely and you can earn as much as you want without any reduction.
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LilMama23
•This ⬆️ My brother got confused about this too and almost didn't take his annuity payments thinking it would mess up his SS. Wasted three months of payments for nothing!
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Dmitri Volkov
i think everyones WRONG here!!!! i had an anuity and social security took away some of my benfits!!! they said it was because i was still working part time at walmart while collecting both. called them 15 times and nobody could explain it right. THE SYSTEM IS RIGGED AGAINST US
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Klaus Schmidt
•In your case, it was likely your Walmart earnings that triggered the reduction, not the annuity. Only wages from actual work count toward the earnings limit. The annuity payments themselves would not have affected your benefits, but your part-time job wages certainly would if they exceeded the annual limit.
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Gabrielle Dubois
Just to add some real numbers to this discussion... For 2025, if you're under FRA for the entire year, the earnings limit is $22,320. If you reach FRA during 2025, the limit is $59,520, but only earnings before the month you reach FRA count. After you reach FRA, there's no limit at all. But like others said, annuity income isn't counted toward these limits. Only job income counts.
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LilMama23
•Thx for the actual numbers! Good to know the limits went up again this year
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Tyrone Johnson
Try calling SSA using Claimyr (claimyr.com). I was having the same problem getting through to SS for weeks, then I used their service and got connected in 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU I was skeptical at first, but it worked great and saved me hours of frustration. The agent I spoke with confirmed that annuity payments don't count toward the earnings limit, only actual work income does.
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Esmeralda Gómez
•Thanks for the tip! I'll check that out. I've been so frustrated trying to get through to a real person.
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LilMama23
My sister had this exact same question!! She was 64 and starting an annuity but only checked w/ her financial advisor who didn't know SS rules. Double check everything w/ SSA directly!!!
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Ingrid Larsson
I'm surprised no one has mentioned the potential tax implications. While annuity income doesn't count toward the earnings limit, it can still affect how much of your Social Security benefits are taxable. If your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds certain thresholds, up to 85% of your benefits may be subject to income tax. So while your benefits won't be reduced due to the annuity, you might end up paying more in taxes depending on your overall income situation.
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Esmeralda Gómez
•Oh wow, I hadn't even thought about the tax angle. I'll need to look into this more. Is there a good resource you'd recommend for understanding how SS benefits are taxed?
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Ingrid Larsson
•Publication 915 from the IRS specifically covers Social Security and tax issues. Also, the SSA website has a section on taxation of benefits. You might want to consult with a tax professional who specializes in retirement income to fully understand your specific situation.
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Aisha Patel
BTW, once you reach your FRA in 2 months, this whole question becomes moot anyway - the earnings test completely disappears at FRA! So even if you do get a part-time job later, you can earn whatever you want without SS reductions.
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Esmeralda Gómez
•That's another relief! I've been counting down the days until FRA. Appreciate everyone's help here.
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