Dear Rusty: I’ve been trying to determine the best way to proceed with retirement and could use some help. I’d like to retire on or about my 62nd birthday this September. Waiting for “full retirement” does not motivate as I have income replacement through my real estate investments. I’ll have way over any earnings limits for 2019, but I don’t want to have my benefits reduced. Can I apply as
SSA suggests three months before my 62nd birthday without running afoul of SSA’s arcane benefit reduction rules? Or should I quit first then apply? Please don’t refer me to my Financial Advisor or local SSA office, they just confuse. Signed: Anxious to Retire
Dear Anxious: Well I’m afraid I can’t offer you any obscure methods to avoid Social Security’s rules & regulations, but perhaps I can clarify some things which will help you manage the timing of your application for Social Security benefits. From what you’ve said, I assume you mean you plan to retire from your working career in September, but by that time you will have greatly exceeded Social
Security’s annual earnings limit (which is $17,640 for 2019). Again, from what you’ve said, you wish to claim SS as soon as possible but you don’t want to lose any benefits because of exceeding the earnings limit. So, if you wish to claim SS as soon as you turn 62, you’ll be happy to know that there is a special rule which applies for your first year of collecting benefits before your full retirement age
(66 ½ in your case).
That “first year rule” essentially says that if you start benefits in mid-year, earnings prior to the month your benefits start don’t count; instead you’ll be subject to a monthly earnings test for the remainder of that year, once your benefits have started. So in your case, your first month of eligibility for SS would be the month of October (you must be 62 for the entire month to be eligible for benefits), and your benefit payment for October would be paid the following month (the payment date will be either the 2nd, 3rd, or 4th Wednesday of the month, depending on the day of the month you were born). Then, starting with the month of October, if you do not have earnings from working which exceed $1,470 in any of the remaining months of 2019, your benefits will not be cut; but if ...
