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Howard Kossover: SSA earnings test still applies until full retirement age

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Q: I reach my full retirement age of 66 in May 2014. Friends told me that I could collect full Social Security retirement as of January 2014 and still be able to work and make as much money as I can. Is this correct?

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A: No. Your friends are wrong for two reasons.

First, in January you will still be younger than your full retirement age (FRA) of 66 so a Social Security retirement benefit started then would be reduced for age.

Second, the annual earnings test, also called the retirement test, applies until you reach FRA.

Starting with the month you reach full retirement age, the earnings test no longer applies and then you can receive SSA retirement with no earnings limit. The earnings test applies for earlier months.

There are three different earnings test levels depending on whether you are younger than full retirement age the entire calendar year, reach FRA in the calendar year, and once you attain FRA. Earnings test dollar amounts for 2014 are not known yet.

Only your gross wages or net self-employment income count for the earnings test.

Usually the earnings test is based on calendar year earnings but a special one-time rule uses monthly rather than annual earnings. Use of this special rule allows benefit payment in the first year of retirement since people retiring mid-year often have earned over annual earnings limit amounts.

Tell your friends that accurate Social Security information is at www.socialsecurity.gov. If using a search engine, be sure you go to the official Social Security website.

Do You Know? Use the Social Security Benefit Eligibility Screening Tool (BEST) at www.benefits.gov/ssa if unsure what SSA benefits might apply to you.

Providing general information based on your answers to questions, BEST lists benefits for which you might be eligible and provides information about how to qualify and apply. It is not a benefit application and your personal records are not used. When you leave the BEST program, all information provided in your answers is erased. The Benefit Eligibility Screening Tool (BEST) can alert you to possibilities not originally considered. Any follow-up with Social Security is up to you.

Based in Grand Forks, Howard I. Kossover is the Social Security Public Affairs Specialist for North Dakota and western Minnesota. Send general interest questions to him at howard.kossover@ssa.gov. Read his online articles at socialsecurityinfo.areavoices.com.

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