The Social Security Administration (SSA) has clarified rules for mid-year retirees regarding the earnings test, which can impact benefit collection. If retirees have not yet reached full retirement age, their benefits may be withheld if their earnings surpass specific thresholds. However, a special rule allows those who retire mid-year to receive full benefits for the months they are considered retired, regardless of their total annual earnings.
For 2026, the earnings test limits are set at $24,480 for those who will reach full retirement age after the year and $65,160 for those reaching it during the year. This means that a retiree who turns 65 in June and earns $96,000 annually can still collect full benefits for the months post-retirement, as long as their monthly earnings drop to $2,040 or less.
The key takeaway for financial professionals is that understanding these nuances can help clients optimize their Social Security benefits, particularly for those considering retirement mid-year.
Source: fool.com