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I will be retiring next April at age 63. Since my income in 2016 will be close to the top in my earning years, I assume this would increase my benefits. How long does it take the SS Admin to post and update what my benefits would be?
Do I have to wait until my 63rd b-day to apply to get the bigger monthly payment or can I apply early and ask that benefits start after my b-day?
One last thing -- will my earnings in January through March 2017 count against the SS benefits I receive in 2017 or 2018?
If you dig down into the SS website, you will see that the increase in benefits by waiting is on a monthly basis. Most people use the rounded years as a reference to show how much it goes up by waiting. The difference between 62 yrs and 11 months to waiting one more month is not all that great.
I do know that you can sign up within three months of FRA and arrange for it to start once FRA is achieved. I don't know about other times.
I will be retiring next April at age 63. Since my income in 2016 will be close to the top in my earning years, I assume this would increase my benefits. How long does it take the SS Admin to post and update what my benefits would be?
Do I have to wait until my 63rd b-day to apply to get the bigger monthly payment or can I apply early and ask that benefits start after my b-day?
One last thing -- will my earnings in January through March 2017 count against the SS benefits I receive in 2017 or 2018?
Thanks!
You are allowed to make a certain amount of money the year you retire. Pick up the telephone and call SS. They're very nice and informative.
The Social Security formula uses the top 35 years of your income in it's calculation. All income prior to the last few years of income will be indexed to current dollar values. Therefore, no single year of high income is going to greatly affect your monthly benefit since 35 years are used in the averaging.
Your 2016 income will be reflected several months after you file your income tax return in 2017.
In 2016 you can earn $1,310 per month ($15720 per annum) before full retirement age (FRA). Anything over this limit your monthly benefit will be reduced by $1 for every $2 that you earn over the limit. This reduction is not exactly lost. It is returned to you in the form of time once you reach FRA. https://www.ssa.gov/pubs/EN-05-10069.pdf
For example lets assume that Tom starts receiving SS at age 62, his monthly benefit is $1000 and that Tom continues to work from age 62 to FRA while receiving his Social Security Benefit. Over that time Tom has repaid $1 for every $2 that he earns and he has repaid a total of $8000. At FRA Social Security computes that Tom has repaid 8 months worth of Social Security. His Social Security benefit will be recalculated as though Tom started his benefit at age 62 and 8 months. Additionally, if Tom's earnings from 62 to FRA are high enough, it could also increase his benefit since those years of income might replace lesser income years in the 35 year averaging.
will my earnings in January through March 2017 count against the SS benefits I receive in 2017 or 2018?
No. That income doesn't matter because nothing you earn before retirement is an offset to benefits. If you quit work entirely and then begin SS, your benefit is not affected.
I will be retiring next April at age 63. Since my income in 2016 will be close to the top in my earning years, I assume this would increase my benefits.
That's often a bad assumption depending on what your earnings history looked like.
If you have 35 years where you made an inflation-adjusted $60K (half of the Social Security cap), adding in a high income year will barely change things. Social Security is extremely progressive for any income above that. Only 15% of it counts.
If you're below that inflation-adjusted $60K for a bunch of your earnings year, replacing those lower income years helps more.
I will be retiring next April at age 63. Since my income in 2016 will be close to the top in my earning years, I assume this would increase my benefits. How long does it take the SS Admin to post and update what my benefits would be?
Do I have to wait until my 63rd b-day to apply to get the bigger monthly payment or can I apply early and ask that benefits start after my b-day?
One last thing -- will my earnings in January through March 2017 count against the SS benefits I receive in 2017 or 2018?
"You must be at least 61 years and 9 months old to apply for retirement benefits.
If you are already age 62, you may be able to start your benefits in the month you apply.
You should apply for benefits no more than four months before the date you want your benefits to start.
Benefits are paid the month after they are due."
The SSA webpage also has other details re applying.
Your 2016 income will be reflected several months after you file your income tax return in 2017.
This was not my experience. I retired las year at full retirement age, and then worked three more months, stopping work on 12/31.
SSA recalculated my check twice in the next few months, bumping up my check in the end by about $20/month. Not huge, but every bit helps.
Keep in mind that SSA income has nothing to do with taxable income, when it comes to benefit calculations as long as you are not collecting a check and working, or at FRA. Your benefit is determined by earnings reported by your employer.
As you approach retirement age, Social Security will recalculate your Social Security benefit to show what you will get if you want your benefit in that month. This is based on the fact that from age 62 to age 65 a percentage of your gross is reduced monthly if you take it early, and from FRA to age 70 a percentage of your benefit is increased if you take the delayed retirement credit.
That is not the same thing as adjusting your social security benefit based on earnings.
This is how it works: Every quarter your employer fills out Form 941 which shows how much wages combined the employees earned. It shows how much income tax combined was withheld, and how much combined social security/medicare was withheld (along with employers portion). This money is all sent into the IRS in one lump sum. The IRS has no idea how much of that money belongs to whom. It won't be sorted out until your employer files your Form W-2 with the Social Security Administration. Until then, there is no way for the Social Security Administration to attribute any wages to you.
Last edited by LookingatFL; 07-29-2016 at 09:08 PM..
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