I have a question and a comment. I will be 63 Dec. 2017. I want to start taking benefits come January 2018 but continue to work ($33,000) per year. I am aware of the reduced benefits and also of the earnings test. My question is when I sign up for my benefits in Jan. 2018, when will SS began to pay my benefit and when will they began to take back benefits due to the earnings test income overage? Will I receive my benefits beginning in Jan - Dec, and then in 2019 will they adjust the overages? I have enjoyed your site and have gained quite a bit of knowledge from it. Now my comment. The "earnings test" should have gone away completely when our "lawmakers" decided to do away with some of it. Why on earth are seniors who want to continue working and draw SS at the same time penalized (62-66) regardless of when WE decide to take our SS knowing that it will be at a reduced rate or not? Let US have control of what we do or not do with it, invest / save / payoff bills etc. Is there any GOOD reason for this out of date law? I know so many seniors who would like to work, but don't because of this law! Also, why are we taxed on SS? Haven't we already paid taxes on it when we worked for it? Again, no good reason that I see. Thank you, Carolyn

Hi Carolyn,

I long ago gave up on trying to figure out the reason for some Social Security laws. It basically just comes down to the preferences of the majority of our representatives in Congress.

Anyway, if you file in January 2018 and estimate your 2018 earnings as $33,000, Social Security will withhold your entire Social Security payment for as many months as it takes to withhold $1 for every $2 that your estimated earnings exceed the 2018 exempt amount. The 2017 exempt amount is $16,920, but that could change next year.

For example, say your January 2018 monthly benefit rate is $1500, and the 2018 exempt amount ends up being $18,000. Your expected excess earnings would be $15,000 (i.e. $33,000 - $18,000), so Social Security would withhold your entire payment for 5 months, or January through May (i.e. 5 months x $1500 = $7500). So, in this example, your first payment would be for June 2018, which would be paid in July. Social Security would then make a final adjustment after the year is over and your exact earnings are known.

Obviously, what actually happens in your case will depend on your earnings estimate, the exempt amount, and your monthly benefit rate. You should strongly consider using the maximization software available on this website to explore all of your options in order to make sure you choose the best possible filing strategy.

Best, Jerry