I am retiring at the end of August from my W-2 job. I turned 61 in July of this year and am claiming Widows benefits to begin effective September 1 (my first check will be in October). My question -- I understand there's a special rule the first year of claiming SS benefits with regard to the earnings limit. If I work as a contractor in Sept, Oct, Nov and Dec -- how much am I allowed to make? I believe it's $1,580 per month. But do they spread it out over the 4 months? In other words if I make $2,000 or $3,000 in September, and nothing else the remainder of the year.... then am I ok with regards to the earnings limit? Would the $3,000 be divided by 4 months, leaving me well under the $1,580 max per month? Hope this makes sense. Thank you for your help!

Hi. Earnings are never averaged when applying the monthly earnings test regardless of whether or not a person works for wages or is self-employed. When a person is self-employed, the special monthly earnings test goes by the number of hours that a person devotes to their trade or business in each month. In most cases when the monthly test applies, a self-employed person can be paid for any month in which they devote no more than 45 hours to their trade or business. However, for highly skilled trades such as medical doctors, the monthly limit is 15 hours.

The reason for using hours instead of earnings is because self-employed people don't necessarily receive the fruits of their labor until long after the work is performed. For example, a farmer normally doesn't receive any income for their work until sell their grain or livestock. You may want to refer to the example on the following Social Security website to gain a better understanding of how the monthly test works for people who go from employment to self-employment (https://www.ssa.gov/benefits/retirement/planner/rule.html).

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Best, Jerry