Social Security earnings limit question - how does SS calculate the $1 for $3 deduction at age 62?

The earnings test is based on your annual income for the whole calendar year, but there's a special rule for the first year you retire. In your first year receiving benefits, SSA only counts earnings in the months AFTER you start receiving benefits. So if you claim in July, they'll only look at your earnings from July-December. And yes, they use your gross wages before taxes. Also, just to clarify - the $1 for $2 reduction applies if you're under full retirement age for the entire year. The $1 for $3 reduction is only for the calendar year you reach full retirement age, and only for the months before you hit FRA.

I went through the EXACT same confusion last year! The $1 for every $2 reduction applies when you're under your full retirement age (which is probably 67ish for you). The $1 for $3 reduction only happens during the year you reach your FRA, and only counts earnings before your FRA month. SSA looks at your W-2 gross earnings or net self-employment income. And yes - during your first year on benefits, they use the monthly earnings test, so only your earnings after you start receiving benefits count. Call them to be 100% sure, but be prepared to wait FOREVER. I spent 2 days trying to get through last year.

im collecting right now (started at 62 last yr) and working part time. they DO use your expected yearly income but didnt ask for proof, jsut took my word for it. but if u make more then u tell them they can hit u with an overpayment later. its gross income not net. the limit for 2024 is like 21,000 and change, will probly be a little more for 2025 with COLA

One thing nobody mentioned - if you're self-employed, SSA looks at both your earnings AND how many hours you work each month. Even if you don't earn much, working more than 45 hours/month in self-employment could trigger SSA to say you're not actually retired! And don't forget that the Retirement Earnings Test (RET) exempts certain income - investment income, pension payments, etc. don't count against you, only earnings from actual work. Finally, once you reach your FRA (probably 67), the earnings test disappears completely and you can earn as much as you want with no reduction.

Have you tried calling SSA directly? I spent THREE DAYS trying to get through their phone lines last month about a similar question. Always busy or disconnected! Then I found a service called Claimyr (claimyr.com) that got me connected to a live SSA agent in about 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU For a question like this about the earnings test, you really need an official answer from SSA based on your specific situation, since there are different rules for the year you file.

I should add - make sure you report your expected earnings to SSA when you apply! If you don't and you earn over the limit, you could end up with an overpayment that you'll have to pay back. You can update your earnings estimate anytime if your work situation changes.

My uncle said nobody actually reports their part-time income and SSA doesn't really check anyway lol

So after reading everyone's comments, it sounds like I should: 1) Understand it's actually $1 reduction for every $2 I earn above the limit (not $3 like I thought); 2) For 2025, they'll only count my earnings after I start benefits in July; 3) I need to report my expected earnings when I apply; 4) It's based on gross wages. Am I missing anything else important?