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Today’s column addresses questions about Social Security’s earnings test, options once reaching full retirement age and having received disability benefits and which month can be optimal to file in. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which markets Maximize My Social Security and MaxiFi Planner.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Will Social Security Penalize Me Because Of My Earnings?

Hi Larry, I will be eligible to take my Social Security retirement benefit starting in September of this year as I will be 62. I have a part time job at a university where I will gross more than the $1,540 per month for that first year I am eligible. Does that mean I will be penalized and I’m not able to take my Social Security or do I pay back one dollar for every two dollars I make? Thanks, Estelle

Hi Estelle, The monthly earnings test limit in 2021 is actually $1,580, not $,1540. If you earn more than $1,580 in every month this year, then you couldn’t be paid any benefits based on the monthly earnings test.


However, depending on the total amount of your 2021 calendar year earnings you might still be able to be paid at least some benefits this year. Before paying you any benefits though, Social Security would need to withhold $1 of your benefits for each $2 that your calendar year earnings exceed $18,960.

For example, say Sally (DOB 5/14/1959) files for benefits effective June 2021. Sally’s monthly benefit rate reduced for her age is $1,200. Sally is earning $2,580 per month throughout 2021, or $30,960 for the calendar year. Social Security would then need to withhold $6,000 of Sally’s 2021 benefits, or $1 for each $2 that her earnings will exceed $18,960 (i.e. ($30,960 – $18,960) / 2). Social Security would do that by withholding Sally’s full benefit payments for June through October (i.e. $1,200 x 5 = $6,000). Sally could then be paid her full reduced benefit amount of $1,200 for the months November and December 2021.

My company’s software — Maximize My Social Security or MaxiFi Planner — is fully programmed to handle both annual and monthly earnings test considerations, so you should strongly consider using our software to help you determine your best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Are There Strategies To Consider Regarding The Conversion Of Disability Benefits To Retirement Benefits?

Hi Larry, I’m trying to find someone who can explain the process of converting from disability to retirement benefits. All the SSA reps say is this happens automatically at FRA. But, prior to becoming disabled, I was planning to wait until 70 to claim retirement as, among other things, my wife is eight years younger than me. Anyway, I’m trying to find some SSA expert who can tell me if there are strategies to delay the conversion from disability to retirement benefits even if, for example, it might mean going off of disability from age 67 to 70 or something. Thanks, Jaso

Hi Jason, You can’t delay the conversion of Social Security disability (SSDI) benefits to regular Social Security retirement benefits. That happens automatically when a person who’s receiving SSDI benefits reaches full retirement age (FRA).

However, if you’re receiving SSDI when you reach FRA, you can choose to voluntarily suspend your retirement benefits anytime from FRA to age 70 in order to earn delayed retirement credits (DRC). DRCs increase a person’s benefit rate by 2/3rds of 1% per month, or 8% per year, so if you suspend your benefits for the entire time from your FRA to age 70 it would increase your resulting benefit rate by 24% to 32% depending on the age at which you reach FRA. FRA can be any age from 66 to 67 depending on a person’s year of birth. Best, Larry

What Month Should I Choose As My Month To Start My Benefit?

Hi Larry, I turn 66 in the end of September 2021, how far in advance do I need to apply for social security? If my full retirement age is 66 and two months, what month to choose as my month to start my benefit? When I will receive my first payment? Thanks, Eliana

Hi Eliana. If you’ll be claiming Social Security retirement benefits and if you want to start your benefits effective with the month you reach full retirement age (FRA), you’d choose to start your benefits effective with November 2021

However, that may not be your best option. The best option for when to start drawing benefits depends on each person’s individual set of circumstances. Therefore, you may want to strongly consider using our software ( to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits.

If you do decide to claim your benefits in November 2021, you could file your application up to four months prior to that, or as early as July 2021. You wouldn’t really need to file in advance though. You could actually apply as late as May 2022 and still be able to claim benefits retroactive to November 2021.

Source: Forbes

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