Will Social Security earnings limit apply after making $40,000 before retiring at 64?

You're in luck! There's something called the "first year rule" or "grace year rule" that applies to your situation. Since you're retiring mid-year, SSA will use a monthly earnings test rather than the annual test. Basically, for the first year you claim benefits, you can get your full SS check for any month you're "retired" - which means you don't earn more than the MONTHLY limit ($1,860 in 2025) and don't perform substantial services if self-employed. So even though you've already earned $40k (which is over the annual limit), as long as you have $1,860 or less in earnings for each month you receive benefits, you'll still get your full SS payment for those months. Just make sure your employer doesn't pay out any bonuses, commissions, vacation pay, etc. after you retire that could put you over the monthly limit. This is one of the few SS rules that actually works in people's favor!

The person above is right about the first year rule but watch out - SS will still want to know your total earnings for the year. My brother retired in August last year and they still asked for his W2 even though he wasn't working anymore. Just keep all your payment stubs and final paycheck info so you can prove when you stopped working.

i retired at 63 and SS messed up my earnings test calculation. took MONTHS to fix and they kept sending me letters about overpayments!!! make sure u call them BEFORE u file to explain ur situation

HEADS UP!! Everyone talking about the monthly earnings test is right BUT make sure you understand that if you're still working for the SAME employer after claiming benefits, the IRS might not consider you truly retired! This happened to my sister and they applied the annual test anyway because she kept working part-time for the same company after claiming. Also, don't forget that once you reach full retirement age (66+8mo for people born in 1959), NONE of these earnings limits apply anymore!!! You can make as much as you want with no penalty.

I just went through this exact situation last year. Here's how it works: 1. For the year you first retire, SSA uses the monthly earnings test instead of the annual test (yay!) 2. The monthly limit for 2025 is $1,860 3. You'll get your full SS check for any month where you don't earn above that amount 4. BUT they don't count your *first* month of retirement until the FULL month after you stop working So if you work even 1 day in June, your first "non-working" month is July. That means your first full SS check would be for August (since SS pays a month behind). Also, some types of special payments like bonuses, accumulated vacation pay, or severance don't count as monthly earnings if they're for work done before you retired. But you need to specifically tell SSA about these. The big thing that trips people up is they don't realize they need to proactively inform SSA about their retirement situation. The system automatically assumes you're subject to the annual test unless you specifically request the monthly test.

To answer your follow-up questions: 1. If you stop working June 15th, June is not considered a non-work month (because you worked part of it). July would be your first non-work month. SS pays benefits a month behind, so your July benefit would arrive in August. 2. When you apply for benefits, there's a question about your current work status and expected earnings. Make it very clear you're retiring and when your last day of work will be. Some people recommend attaching a brief letter explaining your retirement situation. 3. About 2-3 months after you start receiving benefits, you'll likely get an SSA-L9790 form asking about your earnings. This is where you formally request the monthly earnings test by explaining you've retired mid-year. If you want to maximize your benefits for this year, consider stopping work on May 31st instead. That would make June your first non-work month, with payment arriving in July.

My husband's situation was similar to yours about 2 years ago. Just to add something I haven't seen mentioned yet - they'll verify all this when you file your taxes next year. If there's any discrepancy between what you reported to SSA and what shows up on your W-2, they'll adjust your benefits retroactively (which could mean owing money back). So make sure your earnings records are accurate!

does anyone know if disability has the same rules?? my brother is on SSDI and thinking about trying part time work