SS before full retirement age and impact of earned income for expats

Happy Thanksgiving everyone!  Some time ago I recall reading a post on here regarding a member who performed some meager amount of work, I believe self employed, whilst drawing SS and it having a substantial impact on his/her SS payments. I cannot find that post now but if I recall the issue was specific to expats.  As I would quite like to start a small business related to a hobby of mine, and I am otherwise retired and have taken SS early, I would be interested to understand what the pitfalls might be so I can avoid them.  I would be starting this business for fun rather than profit and as a way to pay class 2 NI rather than class 3 hopefully.

Not heard about that specifically. I do know that even while living in the USA your SS payments are reduced if you also work.

https://www.ssa.gov/benefits/retirement/planner/whileworking.html#:~:text=You%20can%20get%20Social%20Security,may%20reduce%20your%20benefit%20amount.

When you begin receiving Social Security retirement benefits, you are considered retired for our purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.

If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.

If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2022, that limit is $19,560.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2022, this limit on your earnings is $51,960. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.

Not heard about that specifically. I do know that even while living in the USA your SS payments are reduced if you also work.

https://www.ssa.gov/benefits/retirement/planner/whileworking.html#:~:text=You%20can%20get%20Social%20Security,may%20reduce%20your%20benefit%20amount.

Yes I knew about that,  but the post I recall was about someone who did a one off consulting gig for a couple grand I think?

Hi. It's harsh.

https://www.ssa.gov/pubs/EN-05-10137.pdf

If memory serves, if you are less than full retirement age and overseas, and are drawing SSA payments, your payments will be cut off if you own a business (even if you don't make a profit).  I would assume a consulting gig would be considered self-employment - hence you would own a business.

Full retirement age is 65 for people
born in 1937 or earlier. Beginning with
people born in 1938, full retirement age
increases gradually until it reaches age
67 for those born in 1960 or later. Work
after full retirement age will not affect
your benefit payments.

If you are under full retirement age, your
work may affect the amount of your
monthly benefit payment.

Report your work to Social Security even
if you work only part-time or you are
self-employed. Some examples of the
types of work your report must include
are work as an apprentice, farmer, sales
representative, tutor, writer, etc. If you
own a business, notify us even if you do
not work in the business or make any
income from it.

If a child beneficiary (regardless of age)
begins an apprenticeship, notify the
Social Security Administration or your
Federal Benefits Unit. We may consider
an apprenticeship as work under the
Social Security program.

We will consider your work outside the
United States under either the foreign
work test or the annual retirement test.

The foreign work test
If you are younger than full retirement
age, we will withhold your benefits
for each month you work more than
45 hours outside the United States in
employment or self-employment not
subject to U.S. Social Security taxes. It
does not matter how much you earned or
how many hours you worked each day.
If you are entitled to benefits as a
dependent of someone whose benefits
we must withhold because of the foreign
work test, we will also withhold your
benefits for the same months, even if you
are not working.

Under the foreign work test, we consider
a person to be working any day
he or she:
• Works as an employee or
self-employed person.
• Has an agreement to work even if
the person does not actually work
because of sickness, vacation, etc.
• Is the owner or part owner of a trade
or business, even if the person
does not actually work in the trade
or business, or the person does not
make any income from it.

If you are a U.S. citizen or resident
receiving U.S. Social Security benefits,
and you are working in a country that
has an international social security
agreement with the United States that
exempts your earnings from U.S. Social
Security taxes, your benefits are subject
to the foreign work test.

Yikes! Won’t be doing that then!

Yeah. I was kind of in the same boat - I retired early and wanted to start a small business doing research while we were living in the UK. I called and spoke to the SSA to confirm I had read everything correctly. The gist of what they said was that they weren't in the business of subsiding foreign vacations. (!!!!) And the yes, if I began to get paid for my research by being employed by some other company, I was under the hours-per-month stipulation. If I did it on my own, it would be considered a business and I'd have my payments withheld until I could proved the business had folded completely.

Very galling - I mean, I paid into SSA my whole working life and kind of consider the payments I get now as "mine", having been earned over decades. Not the largess of the SS Administration.

But it is what it is. Sorry to have had to give you bad news.

'Has an agreement to work even if
the person does not actually work
because of sickness, vacation, etc.'

How can you have an agreement to work if you're on vacation?

You're employed. You may not be on duty, but you are employed.

Hiya Folks,

Just so I know i'm understanding ...
I'm 60, still working 30 hours a week ( NHS healthcare).
Was thinking of looking into taking my US social security early...
Came to Scotland in 1999, so been here a good part of my working life..
If I did want to take it early....
It looks like i'd get hammered as I'm still currently working?

If I did want to take it early....
It looks like i'd get hammered as I'm still currently working?

Correct!  Don’t claim until you quit working.  They also write to you regularly and ask if you are working.  Might be a good idea to go ahead and get your SS forecast though, to see where you’re at

I wonder how the SSA would consider volunteer work in this context?  As a volunteer I would assume you have ‘an agreement to work’  and since the SSA doesn’t care what you earn, only the number of hours worked, it would seem to be covered by this ridiculous rule.