Social Security and You: Question on Online Application Form Still Confusing Many
Having told her all that, I still suggested she just answer the questions with her best guess as to when she might retire and how much she anticipated earning in 2018. But my main point was that she shouldn't worry about her answers.
Q: I am turning 63 in March 2018. I plan to retire the end of that month, and I want my Social Security to start in April. The online application form is asking me about my anticipated earnings in 2018. It also asks how much I will make per month. I work as an airline pilot and I make about $20,000 per month. So I will earn approximately $60,000 from January through March. In addition, after I retire, I will get another $60,000 paid to me over a three-month period. This money includes unused sick and vacation pay, and a small severance payout. I'm not sure how to answer the questions.
A: I purposely put your question behind the last one to help explain the reasons why the retirement application form asks about your anticipated earnings. I told the person who sent the first email that the questions were essentially meaningless. And in her case, they were. But in your situation, your answers to the questions are crucial. Here is why.
The law says if you are a Social Security beneficiary under age 66, you must keep your earnings under specified limits to be eligible for your Social Security checks. In 2018, that limit is $17,040. For every two dollars you exceed that limit, one dollar must be held back from your Social Security benefits. It sounds like you are going to make about $120,000 in 2018, well above the earnings threshold.
But two rules will make you eligible for benefits starting in April. One says that in the first year you retire, if your earnings exceed the yearly limit ($17,040), you can still get a Social Security check for any month your earnings are under a monthly limit, which is always one-twelfth of the annual amount -- or $1,420 in 2018. Because you are retiring at the end of March, you won't be making over $1,420 after that month, so you are due Social Security benefits from April on.
The second rule that helps you says that income paid after retirement, like unused sick and vacation leave or severance payments, or any pension benefit you might be due, doesn't count toward the earnings thresholds.
So you answer the questions by saying you will make $60,000 in 2018, but that your earnings will be "zero" from April through December.
If you have a Social Security question, Tom Margenau has the answer. Contact him at email@example.com. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.