What is the special rule about earnings in the first year of retirement? (2024)

FAQs

What is the special rule about earnings in the first year of retirement? ›

There is a special rule that applies to earnings for 1 year, usually the first year of retirement. Under this rule, you can get a full Social Security benefit for any whole month you are retired and earnings are below the monthly limit.

In 2024, the limit on earnings for the year you reach FRA is $59,520, or $4,960 a month (in 2023, it was $56,520). If you collect Social Security benefits during the year you reach FRA, Social Security will deduct $1 in benefits for every $3 you earn over this higher limit.

If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520. Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.

later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.

How We Deduct Earnings From Benefits. In 2024, if you're under full retirement age, the annual earnings limit is $22,320. If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520.

During the trial work period, there are no limits on your earnings. During the 36-month extended period of eligibility, you usually can make no more than $1,550 ($2,590 if you are blind) a month in 2024 or your benefits will stop. These amounts are known as Substantial Gainful Activity (SGA).

The Social Security five-year rule is the time period in which you can file for an expedited reinstatement after your Social Security disability benefits have been terminated completely due to work.

Some people who file for benefits mid-year have already earned more than their yearly earnings limit amount. We have a special rule for this situation. The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings.

Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.

What is the 3 rule in retirement? ›

The 3% rule in retirement says you can withdraw 3% of your retirement savings a year and avoid running out of money. Historically, retirement planners recommended withdrawing 4% per year (the 4% rule). However, 3% is now considered a better target due to inflation, lower portfolio yields, and longer lifespans.

Retire early in the year if…

You have a pension plan that provides an additional year of service credit on January 1, credits that are used to calculate the size of your pension payout. By waiting until the new year to retire, you might also receive a cost-of-living increase.

“If you have a pension, it is better to retire at the beginning of the year as you will receive a COLA for the new year, plus an extra year's credit,” Sexton said. “If your income is lower in retirement, you will also reduce your tax bracket.”

SPOTLIGHT ON STUDENT EARNED INCOME EXCLUSION -- 2024 Edition

In January 2024 the amount we will exclude is $2,290 monthly up to a yearly maximum of $9,230.

What Is The Maximum Social Security Benefit Available? The highest Social Security retirement benefit for an individual starting benefits in 2024 is $4,873 per month, according to the Social Security administration.

If you are full retirement age and earning money, no worries. You're good to go, no penalties involved. However, if you are younger than full retirement age and make more than the yearly earnings limit, which for 2024 is $22,320, the Social Security Administration (SSA) reduces your benefit.

If you have a disability, you'll also need to prove you've earned less than $1,550 from work per month in the month you're applying. Citizens ages 65 or older don't need to have a disability to get SSI.