published Thursday, September 22nd, 2011

Social Security: Earnings limit different in first year of benefits

By Martin Coffey

Q: Ms. B asks in an email: "I plan to retire in May of 2012, when my school year contract is finished. I will turn 64 in June, and thought I would start collecting reduced Social Security in July, a month after my birthday. A recent column led me to believe that I would be penalized since I would have already earned six months worth of salary for the calendar year 2012. I would be about $28,000 for the six-month period. Please explain what sounds like could be a financial problem for my retiring as planned."

A: For the first year you retire, there is a special rule that we apply. It is as follows:

Sometimes people who retire in midyear already have earned more than the yearly earnings limit. That is why there is a special rule that applies to earnings for one year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you are retired, if you your monthly earnings are $1,180 or less.

In 2011, a person under full retirement age for the entire year is considered retired if monthly earnings are $1,180 or less. For example, John Smith retires at age 62 on Oct. 30, 2011. He will make $45,000 through October.

He takes a part-time job beginning in November earning $500 per month. Although his earnings for the year substantially exceed the 2011 annual limit ($14,160), he will receive a Social Security payment for November and December.

This is because his earnings in those months are $1,180 or less, the monthly limit for people younger than full retirement age. If Mr. Smith earns more than $1,180 in either of those months (November or December), he will not receive a benefit for that month. Beginning in 2012, only the yearly limits will apply to him.

Also, if you are self-employed, we consider how much work you do in your business to determine whether you are retired. One way is by looking at the amount of time that you spend working. In general, if you work more than 45 hours a month in self-employment, you are not retired; if you work less than 15 hours a month, you are retired. If you work between 15 and 45 hours a month, you will not be considered retired if it is in a job that requires a lot of skill or you are managing a sizable business.

For more information please visit our website at www.socialsecurity.gov and look for publication 05-10069 or you may call us at 866-964-0029.

Q: Sarah emails: "I had a prior marriage that lasted 36 years before he passed away. I remarried and after three years, the marriage ended in divorce. Can I draw benefits from my deceased husband at age 60?"

A: Thank you Sarah for this important question. Yes, you may be entitled to monthly benefits from your deceased husband if all of the following requirements are met:

Your deceased husband was fully insured for benefits when he died

You have attained one of the following ages:

* 60, or

* 50-59 and disabled

* You are unmarried

*n You have filed an application for widow's benefits

* You are not entitled to a retirement insurance benefit which equals or exceeds your deceased husband's full benefit amount

* For a divorced widow, all of the previous requirements apply and the marriage to the deceased husband must have lasted at least 10 years.

For more information, you may visit our website at www.socialsecurity.gov or call us at 866-964-0029.

Get answers to your Social Security questions each Thursday from the Social Security District Director Martin Coffey. Submit questions by writing to Business Editor Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by emailing him at dflessner@ timesfreepress.com.

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