The Social Security earnings test will affect any Social Security recipient from the age of 62 until they reach their Social Security Full Retirement Age (FRA).
There is also an earnings test on the FERS Special Retirement Supplement that applies to FERS retirees between their FERS Minimum Retirement Age and the age of 62.
For every dollar earned above the earnings test amount, there is a reduction to an individual’s FERS Supplement or Social Security.
The tables below show the Social Security Full Retirement Age and the FERS Minimum Retirement Age.
Full Retirement Age for Social Security
|Year of Birth||Full Retirement Age|
|1938||65 and 2 months|
|1939||65 and 4 months|
|1940||65 and 6 months|
|1941||65 and 8 months|
|1942||65 and 10 months|
|1943 – 1954||66|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 and later||67|
Minimum Retirement Age for FERS
|Year of Birth||Minimum Retirement Age|
|1948||55 and 2 months|
|1949||55 and 4 months|
|1950||55 and 6 months|
|1951||55 and 8 months|
|1952||55 and 10 months|
|1953 – 1964||56|
|1965||56 and 2 months|
|1966||56 and 4 months|
|1967||56 and 6 months|
|1968||56 and 8 months|
|1969||56 and 10 months|
|1970 and later||57|
So, if an individual was born in the year 1954, they would face an earnings test, on either their FERS Supplement, or their Social Security for a period of ten years (between the ages of 56 and 66).
Let’s define what is meant by the word “earnings”. Earnings refer to what is known as “earned income”, as opposed to “ordinary income”. In other words, it is money you make by working; investments, pensions, etc. are not considered earnings for the purpose of the test. An easy way to define earned income for the purpose of the earnings tests is gross wages and net self-employment income.
The earnings test that applies to the FERS Supplement is the same as the one that applies to Social Security benefits for those Social Security recipients from the age 62 of up to the year they reach their full retirement age. The 2016 earnings test amount is $15,720 ($1,310 per month).
Sally is a Social Security recipient who is age 62 and will turn 66 (her full retirement age) on October 15, 2018. She has been subject to this earnings test from the time of her FERS retirement at her Minimum Retirement Age of 55 years and 10 months, and will remain subject to it through the end of December 2017. For every $2 she earns above the earnings test (which is adjusted annually by inflation), her SS benefit will be reduced by $1.
The second level applies to Social Security recipients in the year in which they reach their full retirement age. The 2016 earnings test amount is $41,880 ($3,490 per month).
Bill is a Social Security recipient who is age 65 and will turn age 66 (his full retirement age) on September 21, 2017. He will be subject to the first earnings test (described above) through December of 2016. Beginning in January of 2017, through the end of August 2012 he becomes subject to the higher earnings test. During that period of time, for every $3 he earns above the earnings test amount, his SS benefit will be reduced by $1. On September 1, 2017 Bill is no longer subject to any earnings test.
The monthly earnings test amounts apply only in the year in which an individual applies for Social Security. If, for example, an individual began collecting Social Security at the age of 62 in July of 2016, their 2016 earnings test would be $1,310 per month for the remainder of the year.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. Order your copy at shoplrp.com. Ask your human resources office to contact Federal Career Experts about pre-retirement training.