Q: Mr. D writes: “Read your column in today’s paper and have a question for you that I haven’t seen answered previously.
I’d like to know what happens if I apply for Social Security before full retirement age later in the year, and I already have income that exceeds the $14,000+ maximum earned income for the year.
For instance, if I applied in September or October and my annual income already is exceeding the maximum, how does that effect my benefits payment?
Or if I retired then and still had some minimal part-time work income (less than $1,000 a month), would that be an additional penalty?
I saw something on the Social Security website about a first-year exemption to the rule but didn’t understand the explanation or qualifications.
Seems like many
who work the first part of a year and
then retire late in the year would have issues with not being able to retire because of income that already exceeds the annual maximum under early retirement rules. Thanks for your advice.”
A: There is a monthly retirement test for people who retire or attain age 62 after they have earned the exempt amount for the year. In 2010, the exempt amount for someone under full retirement age the entire year is $14,160.
The earnings limit for the year you attain full retirement age is $37,680 until the month you attain age 66. You can still receive benefits for any month after you stop work or reduce your earnings below $1,180 gross per month, or $3,140 if you are attaining age 66 later in the year.
This is called the monthly retirement test and usually applies the first year of retirement. The monthly retirement test can only be used one time, and then the yearly earnings test will apply until full retirement age.
Further reference for this question and many others can be found at our website: www.socialsecurity.gov under the Questions segment in the right column. Select “benefits,” then hit GO. Search by keyword.
Q: “What is the difference between Social Security disability and supplemental security income disability?”
A:The Social Security Administration runs two major programs that provide benefits based on disability: Social Security disability insurance (SSDI) and SSI. SSDI is financed with Social Security taxes paid by workers, employers, and self-employed people.
To be eligible for a Social Security benefit, the worker must earn sufficient credits based on taxable work to be “insured” for Social Security purposes.
Disability benefits are payable to blind or disabled workers, survivors, or adults disabled since childhood, who are otherwise eligible.
The amount of the monthly disability benefit is based on the Social Security earnings record of the insured worker. SSI is a needs-based program financed through general revenues.
SSI disability benefits are payable to adults or children who are disabled or blind, have limited income and resources, meet the living arrangement requirements, and are otherwise eligible. The monthly payment varies up to the maximum federal benefit rate, which may be supplemented by the state or reduced by countable income and resources. To learn more about SSDI and SSI disability benefits, visit www.socialsecurity.gov and visit the links along the top of the page for disability and supplemental security income.
Get answers to your Social Security questions each Thursday from the Social Security District Director Martin Coffey. Submit questions by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at jvass@timesfreepress.com.