How does Social Security earnings limit work if retiring before FRA this year?

Good question! The annual earnings limit only applies to earnings you make in months AFTER you start receiving Social Security retirement benefits. So if you claim in September, only your earnings from September through December count toward the $23,400 limit. Your January-August earnings won't affect your benefits at all. This is because Social Security uses what's called a 'monthly earnings test' in your first year of retirement.

I was in a similar situation last year. I retired at 63 in July 2024 when my FRA was 66 and 8 months. I had already earned about $55,000 before claiming, but those earnings didn't count toward my limit. Only what I made from August-December counted. The SSA rep explained they divide the annual limit by 12 for the first year, so you only need to stay under the monthly amount ($1,950) for each month you're receiving benefits. Hope that helps!

CAREFULL!! I thought same thing last yr and got BURNED! Make SURE u tell them ur actual STOPPING work in September. If u say ur just reducing hours they mite apply annual limit to ALL income!! hapened to my brother in law. Huge mess to fix.

The previous comments are generally correct, but I want to add a few clarifications: 1. In your first year of retirement, SSA applies a monthly earnings test rather than the annual test 2. For any month you receive benefits, you can earn up to $1,950 without penalty 3. Any month you earn over $1,950 AND receive benefits, you'll lose that month's benefit 4. Starting in 2026 (the year after you claim), they'll switch to the annual test Also, remember that once you reach your full retirement age of 66 and 10 months, there will be NO earnings limit at all - you can earn any amount without penalty.

Im confused...i thought we dont have to worry about earnings limit until we ACTUALLY collect SS? Thats what it sounds like ur asking. Am I misunderstanding somethin here?

Just went through this whole mess myself trying to reach someone at Social Security to explain this exact situation. Called for THREE WEEKS with no luck getting through. Finally found this service called Claimyr (claimyr.com) that got me connected to an agent in about 20 minutes. They have a video showing how it works at https://youtu.be/Z-BRbJw3puU. The agent confirmed what others are saying - only earnings after you start receiving benefits count toward the limit in your first year. They explained that they look at your monthly earnings after you start collecting rather than the annual total. Saved me so much stress!

Good luck with that earnings limit calculation! When I retired in 2023, I was so worried about it that I just stopped working completely the month before I claimed. The whole system is needlessly confusing.

There's one more important thing to keep in mind: if you're claiming before your FRA (which you are), benefits withheld due to excess earnings aren't lost forever. When you reach full retirement age, your monthly benefit will be recalculated to credit you for those months when benefits were withheld. So even if you do exceed the limit and lose some benefits, you'll eventually get that money back in the form of a higher monthly payment starting at your FRA.

my frend said jus dont report the extra earnings n they wont know but i think thats BAD advice cuz they check ur taxes later!!

Thanks everyone for the helpful replies! To summarize what I understand now: 1. Only earnings after I start collecting in September count toward the limit 2. They'll use a monthly limit of $1,950 for Sept-Dec of this year 3. If I go over in any month, I'd lose just that month's benefit 4. Any benefits withheld would increase my payment after I reach full retirement age I think I'll call SSA to confirm everything before I apply, just to be safe.

This is such a common source of confusion! I went through the exact same worry when I started collecting at 64. The key thing that helped me was understanding that Social Security has what they call a "Special Rule" for your first year of retirement. Essentially, they recognize that most people have already earned income for part of the year before they start collecting benefits, so they only look at your earnings from the month you start collecting forward. In your case, starting in September, only September-December earnings matter for 2025. Your $49,000 from January-August is completely irrelevant to the earnings test. Just make sure when you apply that you clearly indicate September as your retirement month, and you should be all set!

I just want to echo what everyone else has said - you're absolutely on the right track with your understanding! I was in a very similar situation last year when I retired at 65 in October. I had earned about $52,000 from January through September and was panicking about the earnings limit. The SSA representative I spoke with was very clear that the "first year of retirement" rule (the Special Rule) means only your post-retirement earnings count. So in your case, starting benefits in September means only September-December earnings matter for 2025. One tip: when you apply, be very specific about your retirement date and that you're stopping or significantly reducing work in September. They'll ask about your expected earnings for the remainder of the year, so have a good estimate ready for your September-December income. Also, keep good records of your earnings by month just in case they need clarification later. The whole process was much smoother than I expected once I understood how the first-year rule works. You should be in great shape!