If you were born in 1955, next year is your full retirement year with your full retirement month at the month you turn 66 plus two months. It’s time to do some math so you don’t lose the retirement benefits you could have started taking in January 2021, even if you don’t plan to stop working. The earnings limit (wages and self-employment only) for 2020 is $48,600. The limit for 2021 has not been published yet, but it usually goes up by $1,000 or more.
Here is how this strategy works: If you are earning about $80,000 a year from a job or self-employment, you could possibly start taking a retirement benefit in January 2021 and continue working. Social Security only counts your earnings for months prior to your full retirement month. That means, if you were born in April of 1955, they only count your earnings through May of 2021 with June as your full retirement month. At $80,000 per year, you’re only earning $33,333 through May 2021 and could take a slightly reduced benefit starting January 2021 because your earnings are under the limit through May 2021. Social Security doesn’t care what you earn after May 2021 because you are under the $48,600 limit.
And bingo! Thousands of dollars in your pocket before June and you keep working earning your $80,000 for the year. Plus, if your spouse is eligible for spousal benefits, they can file on your record January 2021 as well.
This may not be the best choice for some who want to wait until 70 to maximize their retirement benefit, but if you were going to file in June 2021 (your full retirement month), this is something you may want to consider. For more information on this strategy contact me for a Retirement Benefit analysis.
You can file for a January 2021 benefit any time after August 31, 2020. The online application process is the best way to file. I assist clients in filing online applications, which is a convenience for clients who are not familiar with the online process or who just don’t want to mess with it! My fee is $200 per online application.
About Dennis Heywood
Denny’s career with Social Security provides an in-depth, working knowledge of the Social Security Administration’s internal organization and processes. An expert in all phases of SSA programs: retirement, survivor, disability, and Medicare, Denny has expertise with the complex Social Security regulations based on more than 40 years of experience.