Full question: I will turn 65 in 4/22, not drawing Social Security right now and still working. If I begin drawing Social Security now and retire this summer with my income being just short of 19.5K, avoiding the penalty, but in the fall pick up little part time job maybe making $500 or so a month, which will put me annually over the $19.5, will I be penalized on that amount? I have read a bit about a Non-Service Month which is just over 1600/month which I would be well under. Is that what I would fall under? Sorry if this is confusing, I appreciate your expertise.

Hi there,

In this situation the “first year rule” would apply.

In the first year that you begin your benefits, you may be subject to the monthly limit for earnings. This monthly limit is to help not penalize those who already have gone over the annual limit up to the point in the middle of the year when they begin collecting. For example, if you made $20,000 until July, then you would still be able to collect a benefit for the months of August-December as long as you are not over the monthly limit in any of those months.

If you go over the monthly limit in any of those months, it will get applied to the annual limit again and you could receive an overpayment. We have seen overpayments in many situations like this of upwards of $50,000 that need to be paid back and it can really hurt retirees.

If you plan to do something like this, you may want to consult with an RSSA one-on-one who can help you with a plan to make sure you make the right claiming decision and not receive an overpayment!

Best of luck,
Martha

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