Social Security first year rule - earnings limit based on paycheck dates or hours worked?

The earnings limit for Social Security is based on when you RECEIVE the money, not when you earned it. So that February work paid on March 5th would count toward your March earnings limit. This is how the SSA applies the earnings test for the first year rule. This is actually helpful if you're planning your retirement carefully. It means you could work a lot in December 2024 and get paid in January 2025, and it wouldn't count against your first-year monthly limits if you retire in 2025. Just make sure you're tracking your actual pay dates and keeping all your pay stubs. If you get questioned later, you'll need to show when you actually received the money.

my sister had this EXACT problem last year!! SSA counted her earnings when she got PAID not when she DID the work. she ended up having to pay back almost $2000 because her january check was huge from december overtime and she thought it wouldn't count!!!! KEEP TRACK OF EVERYTHING!!!!!

What everyone's saying about payment dates is correct, but I wanted to add that the monthly earnings test only applies during your first year of retirement. After that, it switches to an annual limit (which is $21,240 for 2025 if you're under FRA the whole year). That's something to keep in mind for your planning. Also, if you're still working for the same employer after claiming benefits, make sure your reduction in hours represents a significant retirement. SSA can question whether you're really retired if your work pattern doesn't change much.

I recently helped my father with this exact situation. After spending 4 days trying to reach someone at SSA (constant busy signals and disconnections), we found a service called Claimyr that got us through to an actual SSA agent in under 10 minutes. The agent confirmed it's when you RECEIVE the money that counts, not when you earn it. They also recommended keeping detailed records of all payments received after your retirement month begins. If you need to speak with SSA directly about your specific situation, check out claimyr.com or watch their demo at https://youtu.be/Z-BRbJw3puU - saved us hours of frustration!

Congrats on your retirement! Just wanted to share that when I retired 2 years ago, I made sure all my big commissions came in before my retirement month started. Made things SO much easier to manage with the monthly limit.

Have u thought about waiting til your FRA??? Then you don't have to worry about any limits at all! That's what I did and sooooo much less stressful!

My understanding was it's when you EARNED the money not when it's paid??? That's what the SSA agent told me on the phone last month. Now I'm confused 🤔

One important thing no one has mentioned yet: if you exceed your monthly limit, Social Security will withhold your ENTIRE benefit for that month, not just the amount you went over. This trips up a lot of people. For example, if your monthly limit is $1,950 and you earn $2,000, you don't just lose $50 in benefits - you lose your entire SS payment for that month. Plan accordingly!

Mason, I went through this exact situation when I retired at 62 in 2023. The payment date rule saved me! I actually worked overtime in December 2022 but didn't get paid until January 2023 (after my retirement started), and those earnings counted toward my January limit. One tip that really helped me: I created a simple spreadsheet tracking my expected pay dates vs. work dates for the first few months. This let me see exactly which paychecks would hit which months and plan my hours accordingly. Also, don't forget that vacation payouts, bonuses, and any other compensation follow the same rule - it's all about when you actually receive the money. I had a small bonus that got delayed from February to March, which actually worked in my favor for staying under the limit. You're smart to plan this out carefully ahead of time! Good luck with your retirement next month!

Just wanted to chime in as someone who's currently going through this process! I'm 64 and started collecting benefits last year while still working part-time. The payment date rule is absolutely correct - it's when you RECEIVE the money that counts for the earnings test. One thing that really helped me was contacting my payroll department early to understand exactly when my paychecks would be processed and deposited. Some companies have flexibility in when they cut final paychecks or vacation payouts, which can be helpful for planning. Also, Mason, since you mentioned you're switching to a 16-hour part-time position, make sure you get documentation of that schedule change. I kept emails from HR confirming my new reduced schedule just in case SSA ever questioned whether my retirement was legitimate. The monthly limit can feel restrictive at first, but once you get through that first year and switch to the annual earnings test, it becomes much more manageable. You're doing all the right things by planning ahead!

This is such valuable information - thank you everyone for sharing your experiences! As someone who's been helping seniors navigate Social Security for years, I can confirm that the payment date rule is absolutely correct for W-2 employees. One additional tip I'd suggest: if you're planning to work right up until your retirement month starts, consider asking your employer if they can delay your final large paycheck (if any) until after your retirement begins, so it counts toward your new monthly limits rather than potentially creating tax complications in your pre-retirement period. Also, Mason, since you're going from 40+ hours to 16 hours, that's definitely a substantial retirement in SSA's eyes. Just make sure your job duties have changed significantly too - sometimes they look at whether you're doing the same work, not just fewer hours. But going to a different position like you mentioned should cover that perfectly. The spreadsheet idea from Aaron is genius - I'm going to start recommending that to all my clients who are in similar situations. Planning ahead like you're doing is exactly how to avoid the costly mistakes that trip up so many new retirees!

Mason, congratulations on your upcoming retirement! I went through this same situation when I retired at 63 two years ago. Everyone here is absolutely right - it's based on when you RECEIVE the payment, not when you work the hours. I learned this the hard way when I was being overly cautious and actually turned down overtime in February because I thought it would count against my March limit, even though I wouldn't be paid until April! Don't make my mistake. One thing I found really helpful was setting up direct deposit alerts on my phone so I knew exactly when each paycheck hit my account. That way I could track my monthly totals in real-time instead of guessing based on pay periods. Also, since you're moving to a different position with significantly fewer hours, you're in great shape with SSA's retirement requirements. The key is that substantial change in both hours AND job duties, which you clearly have. The first year monthly limits feel scary, but once you get the hang of tracking your actual receipt dates, it becomes much more manageable. You're asking all the right questions and planning ahead - that's exactly how to do this successfully!

Mason, I just wanted to add one more practical tip that really helped me when I went through this transition at 62. Since you're planning to work those last two weeks of February and get paid March 5th, make sure you get a pay stub or some documentation showing exactly what dates those earnings cover. I had a situation where my employer's payroll system showed confusing date ranges, and when SSA reviewed my case later, having clear documentation of which work periods corresponded to which payments made everything go smoothly. Also, if your employer offers any flexibility on when final paychecks are processed, it might be worth having that conversation early. Some companies can adjust the timing slightly if it helps with your retirement planning, especially if you explain the Social Security earnings test requirements. The fact that you're thinking through all these details ahead of time shows you're going to handle this transition really well. Best of luck with your retirement next month - sounds like you've got a solid plan in place!