When does Social Security earnings limit apply if husband retires mid-year after making $50k?
My husband is planning to retire next year (2025) a few years before his FRA. He'll work January through May and expects to earn about $50,000 before he stops working. I'm confused about how the annual earnings test works in this situation. Does the earnings limit only apply to what he makes after he starts collecting benefits in June? Or does Social Security count all his income from the entire year, including the $50k he'll make before retiring? We're trying to avoid any benefit reduction if possible. Will the monthly earnings test help us in this case since it's his first year claiming?
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Sofia Ramirez
For your husband's first year of retirement, he can use the monthly earnings test instead of the annual test. This is specifically designed for mid-year retirees. Even if he earns $50,000 in those first 5 months, as long as he doesn't earn over the monthly limit AFTER he starts receiving benefits, he won't have benefits reduced. For 2025, the monthly limit will likely be around $1,850 (it's $1,770 for 2024). So once he starts collecting, he just needs to stay under that amount each month for the rest of 2025.
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NebulaKnight
•That's such a relief! I was worried all that money from Jan-May would count against him. Do we need to specifically request this monthly test when he applies, or does SSA automatically apply it for first-year retirees?
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Dmitry Popov
My cousin did something similar last yr and SSA still reduced his benefits bc they looked at his W2 for the whole year. Ddnt know about any monthly test??? They took back like $3000 from him!
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Sofia Ramirez
•Your cousin should appeal that decision. The monthly earnings test is definitely real - it's in the SSA Program Operations Manual System (POMS) section RS 02501.030. It sounds like whoever processed his application didn't apply the proper rule for first-year retirees.
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Ava Rodriguez
Honestly this is why I waited until my Full Retirement Age. No earnings test to worry about, no complicated calculations, no surprises. The peace of mind was worth waiting for.
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NebulaKnight
•We thought about waiting too, but my husband's job is physically demanding and he's having more health issues. It made more sense for us to take the reduced amount now than push for FRA. But you're right - the rules are confusing!
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Miguel Ortiz
The special rule for the first year of retirement is critical in your situation. Since your husband will retire in May 2025, SSA will only count his earnings for any month AFTER he starts receiving benefits. So the $50k from January-May won't matter as long as he stays below the monthly limit afterwards. However, you should know that if he exceeds the monthly limit even once during the remainder of 2025 (even by a few dollars), SSA will revert to using the annual limit and count ALL earnings for the year. I've seen this happen to clients who didn't understand this detail. When applying, specifically mention to the claims representative that you want to use the monthly earnings test for first-year retirees. Don't assume they'll automatically apply it.
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NebulaKnight
•Thank you for that important detail! My husband was considering doing some part-time consulting after retiring, but now I see that could mess up the monthly test. We'll make sure he stays completely under the monthly limit until 2026.
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Zainab Khalil
I had EXACTLY this situation in 2023!!! First, definitely use the monthly earnings test - it's the only reason I didn't get my benefits reduced after making $62k before retiring in July. But CALLING SSA to get this properly handled was IMPOSSIBLE!!!! I tried for WEEKS to get through on their 800 number - constant busy signals, disconnects after 2 hours on hold. So frustrating!
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QuantumQuest
•You should try Claimyr if you need to reach SSA by phone again. I was in a similar situation with endless hold times, but Claimyr got me connected to an agent in about 25 minutes. They basically hold your place in line and call you when an agent is available. Their demo video explains it better: https://youtu.be/Z-BRbJw3puU - I found their site (claimyr.com) after my third failed attempt to reach SSA about my Medicare enrollment.
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Connor Murphy
Just to clarify some information here: 1. The monthly earnings test applies in the first year you receive Social Security retirement benefits while under Full Retirement Age 2. For 2025, the monthly limit will be around $1,850-1,900 (adjusted for COLA from the 2024 amount of $1,770) 3. Any month your husband earns over that limit counts as a work month and he won't receive benefits for that month 4. The $50,000 earned January-May won't affect his benefits as long as his retirement is considered a complete cessation of work and he stays under the monthly limit for each month he receives benefits 5. Starting in 2026, only the annual limit will apply (approximately $23,400 for the year if he's still under FRA) Make sure to clearly explain this is a mid-year retirement when he applies so they apply the monthly test correctly.
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NebulaKnight
•Thank you for breaking it down so clearly! Do you happen to know if my husband needs to provide any special documentation to prove he fully retired from his job? Or is his word enough?
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Dmitry Popov
I think its dumb that they even have a limit. We paid into this our whole lives and then they dont let us work?? Makes no sense!!
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Ava Rodriguez
•It does seem counterproductive. They want seniors to stay active but then penalize us if we work too much before FRA. At least the limit goes away completely once you reach full retirement age.
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NebulaKnight
Thank you all for the incredibly helpful information! I've taken notes on everything: - We'll use the monthly earnings test for 2025 - Request this specifically when applying - His $50k from Jan-May won't count as long as he stays under the monthly limit after starting benefits - Make sure he doesn't exceed the monthly limit even once or they'll switch to annual test - Keep documentation of his retirement This is such a relief - we were worried we'd lose thousands in benefits. I'll update after we apply to let everyone know how it goes!
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Miguel Ortiz
•Smart planning! One more tip: when your husband applies, get the name and direct extension of the claims representative who handles his application. This makes follow-up much easier if there are any issues with how the monthly earnings test is applied.
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