Q. I am retiring in 2010 but expect income in 2011 from work I did before retiring. Will this lower my 2011 Social Security benefits?
A. For people younger than full retirement age, the annual earnings test concerns the amount you can earn a year without reducing benefits. Payment received for work done before you retired usually will not affect your benefits. Social Security terms these "special payments."
For example, employee income received after retirement counts as a special payment if the last thing you did to earn the payment was completed before you stopped working. This could include accumulated vacation or sick pay, bonuses or sales commissions. If you're self-employed, net income received after the first year you retire counts as a special payment if you performed the services to earn the payment before becoming entitled to receive Social Security.
Two local occupational groups commonly receiving special payment earnings for Social Security purposes are insurance salespeople and farmers. Many insurance salespeople receive commissions after the year they retire for policies previously sold. If the income resulted from work completed before retirement, it will not affect benefits. If a farmer fully harvested and stored a crop before or in the month of entitlement to Social Security benefits, and it is then carried over and sold in the next year, the income will not affect benefits for the year it is received.
For more information, log on to www.socialsecurity.gov .
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General information questions can be sent to Howard I. Kossover, SSA, 402 DeMers Ave., Suite 300, Grand Forks ND 58201; phone (701) 772-5518, ext. 200; fax: (701) 772-8622; e-mail: howard.kossover@ssa.gov . Please include the name of the paper in which you read the article. General information also is available on the agency website, www.socialsecurity.gov , or by calling the national toll-free number, (800) 772-1213.
