Is The Social Security Earnings Limit Broken Down Monthly?

Sep 10 2018 - 7:12am

I can earn 17,000.00 extra in 2018 without affecting my Social Security amount. Is that broken down monthly or for year affecting my monthly Social Security


If you're drawing reduced Social Security benefits and you'll be under age 66 throughout 2018, you could earn up to $17,040 during the 2018 calendar year (i.e. January 1 through December 31) without losing any of your Social Security benefits. As long as your earnings don't exceed $17,040 for the calendar year, it doesn't matter how much you earn in any given month.

There is also a separate monthly earnings test that can be used as an alternative to the annual earnings test, but it can only be used in one year and it's only used if it's more advantageous for the person claiming benefits. The monthly test permits a person to draw benefits for any months in 2018 that they earn no more than $1420 regardless of how much they earn for the year.

For example, say Lisa files for Social Security benefits at age 62 in September 2018. Lisa has already earned $25,000 in the first 8 months of 2018, but she'll have no earnings in the months September through December. Using the annual earnings test, Lisa would lose $1 of her benefits for each $2 that she earned in excess of $17,040, or $3980 in benefits (i.e. ($25000 - $17040)/2). However, Lisa could be paid in full for the months September through December using the monthly test since she won't earn more than $1420 in any of those months. Therefore, the monthly test would be used in Lisa's case because it is more advantageous to her.

Our maximization software is programmed to consider both the annual and monthly earnings tests, so you may want to consider using it to explore your options and determine your best strategy for claiming Social Security benefits.

Best, Jerry