Social Security [Earnings Test Question]

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kajb1313
Posts: 2
Joined: Thu Oct 11, 2018 9:31 am

Social Security [Earnings Test Question]

Post by kajb1313 » Tue Jun 11, 2019 12:22 pm

Hi Everyone,

First, I want to thank everyone who invest their time in answering everyone's questions. I have been a fan for a long time and just sitting on the sidelines reading the new subjects have made me richer & smarter.

First some background:

Age 65
Current Investment Portfolio - $780K
Current Part Time, $32K per year.
SS FRA - 8/1/2020
Start SS on 1/1/20 - 65 years, 5 months young.
Expected monthly benefit - $2,200

My question is with regards to the SS Earnings Test. I know there is a Special Exemption for the year you reach your FRA which for 2019 is $46,920. It's my understanding that for the period of 1/1/20 - 7/31/20, I can have earnings of $46,920 WITHOUT losing any of my SS Benefits for 2020. My question for everyone out there is: Will I start receiving my full benefit check on 1/1/20 of $2,200 even though I won't be at my full FRA until 8/1/20? Will there be any holdback by SS? Is there anything I should consider before filing for SS to start on 1/1/20? I would like to start on 1/1/20 even though I will be leaving about 3% on the table.

Thank you,

mhalley
Posts: 7000
Joined: Tue Nov 20, 2007 6:02 am

Re: Social Security [Earnings Test Question]

Post by mhalley » Tue Jun 11, 2019 1:24 pm

I think if the benefits are reduced due to earnings, you get them back after you reach fra. But as you will not be earning more than $46,920, you should not have a reduction in benefits due to working. You realize that by taking ss early, it is a permanent reduction of 3.9%, not just until you reach fra?
https://www.fidelity.com/viewpoints/ret ... nd-working
.These benefits are not truly "lost," however. If your benefits have been reduced due to earning too much prior to reaching your FRA, you will get these benefits back at your FRA when your monthly Social Security check will be increased to account for benefits withheld earlier due to excess earnings.3
https://www.thebalance.com/early-retire ... ts-2894593

Silk McCue
Posts: 2403
Joined: Thu Feb 25, 2016 7:11 pm

Re: Social Security [Earnings Test Question]

Post by Silk McCue » Tue Jun 11, 2019 1:51 pm

If you start SS before your FRA you will permanently receive less than your FRA amount for claiming early. The exception for earnings in the year you reach FRA is for the entire year, not just up to your FRA date.



We know nothing about your marital status or your plans for future spending/desire to leave an inheritance for anyone so there is other big picture feedback that you could get here if we knew it. That advice could include tax wise decisions that you could make now.

Cheers

Topic Author
kajb1313
Posts: 2
Joined: Thu Oct 11, 2018 9:31 am

Re: Social Security [Earnings Test Question]

Post by kajb1313 » Wed Jun 12, 2019 11:55 am

Currently single, never married. All great comments. Really appreciated the articles. My feeling on missing out on the 3.9% ($80) a month, is the question everyone struggles with (I'm assuming) At what age will I live to? Family history tells me probably around the early 80"s. Mom is 86 & my Grandmother was 86 when she passed.

I have no debt, owe my home free & clear (approx. $325K). No major expenses on the horizon.
Since SS is estimated to even out over a certain period of time no matter when you start collecting, I'm debating on why wait the extra 7 months till my FRA vs. start collecting on 1/1/20 and forego the extra $80 month.

TBillT
Posts: 681
Joined: Sat Sep 17, 2011 1:43 pm

Re: Social Security [Earnings Test Question]

Post by TBillT » Wed Jun 12, 2019 12:07 pm

Lot's of us are using Mike Piper's OpenSocialSecurity.com tool which will give you a recommendation. You can probably fiddle with life expectancy to see the differences in what might be suggested.

Silk McCue
Posts: 2403
Joined: Thu Feb 25, 2016 7:11 pm

Re: Social Security [Earnings Test Question]

Post by Silk McCue » Wed Jun 12, 2019 12:45 pm

TBillT wrote:
Wed Jun 12, 2019 12:07 pm
Lot's of us are using Mike Piper's OpenSocialSecurity.com tool which will give you a recommendation. You can probably fiddle with life expectancy to see the differences in what might be suggested.
I entered OP's numbers in opensocialsecurity.com based on their info. It recommends 68 and 0 months for a benefit of $2552 monthly $30,624 annually. They could certainly fund until that time (and age 70 just as easily) with IRA withdrawals (in fact doing so will help reduce future RMDs which will increasingly impact the taxation of their SS benefits). The higher SS benefit is guaranteed. The performance of the investments is not.

Regardless they should be ok whatever path they choose.

Cheers

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