Social Security Question for my Wife

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fishandgolf
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Social Security Question for my Wife

Post by fishandgolf » Thu Nov 07, 2019 8:11 am

My wife will turn 65 on April 10, 2020. She is currently working 4 days/wk making $40k per year. She is contemplating on taking her social security benefits starting May 1, 2020 and then retire in October 2020. If she would do that, she could earn $18,240/yr before SS would start deducting one dollar for every two dollars she earns.

Question: Does her full year wages count against the deduction or does it start on the day she starts to collect?

Cactuscoug
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Re: Social Security Question for my Wife

Post by Cactuscoug » Thu Nov 07, 2019 8:20 am

I just went through this with my brother . . . It starts with $$$ earned after you retire.

Silk McCue
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Re: Social Security Question for my Wife

Post by Silk McCue » Thu Nov 07, 2019 8:25 am

The earnings test prior to reaching FRA is your annual earnings not the date when you start taking SS early in that year. Her earnings starting in January will count towards the earnings limit test.

Cheers

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ObliviousInvestor
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Re: Social Security Question for my Wife

Post by ObliviousInvestor » Thu Nov 07, 2019 8:30 am

Silk McCue wrote:
Thu Nov 07, 2019 8:25 am
The earnings test prior to reaching FRA is your annual earnings not the date when you start taking SS early in that year. Her earnings starting in January will count towards the earnings limit test.
This is correct.

A likely-relevant rule here though is the "grace year rule" which states that the earnings test will not result in benefits being withheld during a "non-service month" in a grace year.

A “non-service month” is a month in which you earn less than 1/12th of the annual threshold for the earnings test (so, $1,520 for 2020) or in which you do not perform substantial services for your business if you are self-employed. And the first year in which you have a non-service month while claiming a retirement benefit, spousal benefit, or widow(er) benefit is called your “grace year.”
Mike Piper, author/blogger

MathWizard
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Re: Social Security Question for my Wife

Post by MathWizard » Thu Nov 07, 2019 8:44 am

If she waits to get a check until July 2021, the first month after she reaches FRA, she can work as long as she wants with no reduction.

If she claims before FRA, and her PIA is less than 1/2 your PIA, it will permanently reduce spousal benefits. It will not however reduce survivor's benefits.

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fishandgolf
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Re: Social Security Question for my Wife

Post by fishandgolf » Thu Nov 07, 2019 8:50 am

Thank you BH's for your input.

Another Question: Ok.....if she does start to collect benefits starting May 1, 2020 and her income has already exceeded the $18,240.00, so she would then get approximately 1/2 of her benefits? Her annual benefits are ~$16,000.00/yr gross. So does SS deduct against her benefits? How is this calculated?

Also, when she reached FRA at 66 years and 2 months, does she then receive the amount deducted in a lump sum?

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ObliviousInvestor
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Re: Social Security Question for my Wife

Post by ObliviousInvestor » Thu Nov 07, 2019 9:16 am

fishandgolf wrote:
Thu Nov 07, 2019 8:50 am
Another Question: Ok.....if she does start to collect benefits starting May 1, 2020 and her income has already exceeded the $18,240.00, so she would then get approximately 1/2 of her benefits? Her annual benefits are ~$16,000.00/yr gross. So does SS deduct against her benefits? How is this calculated?
$1 of benefits is withheld for every $2 of excess annual earnings. (In the year in which she reaches FRA it is $1 withheld for every $3 of excess earnings. Also, the threshold is higher that year. And only earnings in the month prior to FRA are counted in the calculation.)

But again, please note the grace year rule described above.
fishandgolf wrote:
Thu Nov 07, 2019 8:50 am
Also, when she reached FRA at 66 years and 2 months, does she then receive the amount deducted in a lump sum?
No. Her benefit is adjusted to account for months she did not receive a full benefit. For example if a person files 24 months before FRA, but then the earnings test results in 10 months of benefits being withheld, her benefit would be adjusted (effective as of FRA) to what it would be if she had only filed 14 months early.
Mike Piper, author/blogger

rivercrosser
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Re: Social Security Question for my Wife

Post by rivercrosser » Thu Nov 07, 2019 12:30 pm

fishandgolf wrote:
Thu Nov 07, 2019 8:11 am
My wife will turn 65 on April 10, 2020. She is currently working 4 days/wk making $40k per year. She is contemplating on taking her social security benefits starting May 1, 2020 and then retire in October 2020. If she would do that, she could earn $18,240/yr before SS would start deducting one dollar for every two dollars she earns.

Question: Does her full year wages count against the deduction or does it start on the day she starts to collect?
When she starts collecting. What she makes up until May doesn't matter. The next full year it goes by the entire year. This link explains it.

https://www.ssa.gov/planners/retire/rule.html

Silk McCue
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Re: Social Security Question for my Wife

Post by Silk McCue » Thu Nov 07, 2019 12:50 pm

rivercrosser wrote:
Thu Nov 07, 2019 12:30 pm
fishandgolf wrote:
Thu Nov 07, 2019 8:11 am
My wife will turn 65 on April 10, 2020. She is currently working 4 days/wk making $40k per year. She is contemplating on taking her social security benefits starting May 1, 2020 and then retire in October 2020. If she would do that, she could earn $18,240/yr before SS would start deducting one dollar for every two dollars she earns.

Question: Does her full year wages count against the deduction or does it start on the day she starts to collect?
When she starts collecting. What she makes up until May doesn't matter. The next full year it goes by the entire year. This link explains it.

https://www.ssa.gov/planners/retire/rule.html

You are misinterpreting the application of this special rule. It does not apply to OP's wife situation. She will be working through October having started SS on May 1 and not retiring by definition until that time. Her benefits will be reduced from May SS start date until they retire based on income year to date.

ObliviousInvestor - resident expert and published author on the subject has previously addressed the answer in this thread.

Cheers

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