Hi Larry. I was planning on leaving my job in December 2020 and claim widow benefits in January 2021 and then claim my own SS when I turn 70. However I will get a vacation buy out of about $17,000 in January 2021. Should I delay starting the widow benefits until 2/2021 or leave my job earlier so I get the vacation buyout in 2020? I am trying to figure out if the income in 2021 will affect the widow benefit through the earnings test. Thank you for any clarification.

Hi,

I can't give you any advice about your best overall strategy for claiming your benefits without more information. What I can tell you is that if your employment relationship terminates in December 2020 and you receive a payment for your accumulated vacation pay in January 2021, that payment could be excluded from counting toward the 2021 Social Security earnings test (https://secure.ssa.gov/apps10/poms.nsf/lnx/0302505015).

However, you would need to notify Social Security about the details of your vacation payment in order for them to exclude it from counting. If you don't do that, Social Security will count your full W-2 earnings for earnings test purposes, since that's the only information they will automatically receive. The preferred form that Social Security uses for these types of cases is an SSA-131 (https://www.ssa.gov/forms/ssa-131.pdf).

Before deciding when to claim your benefits, you should strongly consider using our software to explore and compare all of your options so that you can choose the optimal strategy for claiming your benefits.

Best, Jerry