Planning to work in 2012 while receiving Social Security retirement? Keep in mind the annual earnings test, also known as the retirement test. Amounts for 2012 have changed from 2011.
The earnings test involves how employment earnings in a calendar year might affect your SSA retirement. Only your own gross wages or net income from self-employment is included. Income from investments, interest, pensions and capital gains are not. Earnings of your spouse do not count toward your earnings limit but, if also receiving SSA retirement, will count toward his or her own earnings limit.
Earnings test amounts are based on your actual age and your full retirement age (FRA). If born from 1943 to 1954, FRA is age 66.
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If under your FRA for the entire calendar year, the 2012 earnings limit is $14,640. For earnings earn over that, one dollar is deducted from your benefits for every two you earn above the annual limit. For example, if you earned $1,000 over this amount, the earnings test formula means that $500 would be deducted from your benefits for the year.
If you will reach full retirement age in 2012, the earnings limit on your earnings for months before FRA is $38,880. One dollar in benefits is deducted for every three dollars earned above this but only for months before you reach FRA.
Starting with the month you reach full retirement age, there is no limit on your earnings. At that point, the annual earnings test no longer applies.
Earnings test amounts are for a calendar year. Since people retire all during the year, a special monthly test is used for one year, usually the first year of retirement. This makes it possible to start SSA retirement during any month of the year even if your pre-retirement earnings exceeded earnings test levels.
Do you expect to earn over your applicable earnings test amount in 2012? Provide your estimated earnings amount to SSA early in the year. This lets your benefits be adjusted in advance to avoid incorrect payment. You can change estimates as needed.
FRA and earnings test information is at (www.socialsecurity.gov). Also see "How Work Affects Your Benefits" at that site. Information is also available at all SSA locations.
Individually, the earnings test also applies to family members receiving SSA benefits. Different work rules apply for disability benefits. If receiving disability or Supplemental Security Income (SSI) contact Social Security for current information.
Employers are required to withhold Social Security and Medicare related taxes even if you are receiving SSA benefits. In 2012, the maximum amount of earnings subject to the Social Security tax will increase to $110,100 from $106,800 in 2011. Social Security automatically reviews beneficiary records for new wages each year to see if the new earnings increase benefit amounts.
Contact the Social Security Administration in several ways. Visit the SSA website at (www.socialsecurity.gov) for information, retirement planning tools and online retirement and Medicare applications. Call the SSA national toll-free number 800-772-1213 (TTY 800-325-0778) from 7 a.m. to 7 p.m. about your benefits or to make an appointment. The Minot office can be reached directly at 866-415-3193 from 9 a.m. to 3:30 p.m.
Howard I. Kossover is the Social Security Public Affairs Specialist for North Dakota and western Minnesota. Questions of general interest can be sent to him at howard.kossover@ssa.gov.