FEDweek Info

[swsop]

Social Security Figures Affected

Several figures important in the Social Security program
are being adjusted for 2007. Earnings subject to the 6.2
percent Social Security withholding tax will rise to $97,500 from
$94,200 (the 1.45 percent Medicare tax has no cutoff). Employees
in FERS and CSRS-offset pay the tax, but while the withholding cuts
off for FERS employees at that level, CSRS-offset employees
continue to pay it, with the money going into the federal
retirement trust fund rather than the Social Security fund. Also,
the earnings test applying to Social Security beneficiaries aged
62 through "full retirement age"--for 2007, 65 and ten months--is
increasing to $12,960 from $12,480. Those beneficiaries lose $1
in Social Security benefits for every $2 in earnings through
employment or self-employment above the limit. A separate earnings
test applies only to earnings for months in the year an individual
reaches full retirement age prior to the individual attaining that
age. One dollar in benefits will be withheld for every $3 in
earnings above $34,440, up from $33,240. There is no limit on
earnings beginning the month an individual attains full retirement
age.

SWSOP

 

[clester]

One interesting note for those of us in FERS early retirement rules (I'm ATC). If you retire before your MRA (which for me is 56) you are not subject to the earnings test until you reach your MRA. So if you retire at age 50 and your MRA is 56 you get full Supplement until your 56 then its reduced 50% up to the limit. Another good reason to retire early! (If you want to work somewhere else)

 

[ssafed]

This sentence in the post may mislead some about the earnings test for Social Security "A separate earnings test applies only to earnings for months in the year an individual reaches full retirement age prior to the individual attaining that age." While this is true for the year you reach FRA, there is a special test the FIRST year you retire and apply for SS too. Basically, it provides a MONTHLY earnings test for people to be eligible for SS benefits even if they have made way over the annual limit for the YEAR. For example, you may have earned $40,000 when you choose to retire 7/1/07 at age 62, but if you will not work and earn over 1/12 of the annual earnings limit in each month July - Dec 2007, you can draw SS benefits for those months.