Social Security earnings limit confusion: Will my January-March income count towards the $23,400 limit when taking SS at 62?

They only count the money you earn in months AFTER you start receiving benefits. So if your first SS check is for April, then only your earnings from April-December count toward that $23,400 limit. Your January-March income doesn't matter at all for the earnings test. I went through this last year when I took early retirement at 63. The SSA rep explained that for the first calendar year, they apply the earnings test on a monthly basis. The monthly limit is the yearly limit divided by 12, which would be $1,950 per month for 2025. But again, they only look at months when you're entitled to benefits. Just make sure you report your estimated earnings to SSA when you apply!

THis is confusing. My brother told me they look at ALL your income for the year. He got in big trouble because they made him pay back some of his benefits. The government always wants to take money back even when THEY make the mistake!!

Let me clarify how this works exactly since there's some confusion here. In your first year of retirement, SSA applies what's called the Monthly Earnings Test rather than the Annual Earnings Test. If you start receiving benefits in April: 1. For January-March: Earnings don't count toward the limit AT ALL, regardless of how much you earned those months. 2. For April-December: You're subject to a monthly limit (which is the annual limit divided by 12). For 2025, that's $1,950 per month. 3. For any month you earn above $1,950, you might not receive benefits for that specific month. After your first calendar year on benefits, it switches to the annual test where timing doesn't matter - just the total for the year. This is covered in SSA's POMS section RS 02501.030 if you want to look it up.

This is why calling Social Security directly is SO important with retirement questions! I spent THREE WEEKS trying to get someone on the phone last year for this exact same question. Every time I called I was on hold for hours and then got disconnected. Finally I found a service called Claimyr (claimyr.com) that got me through to an agent in under 5 minutes. You can see how it works at https://youtu.be/Z-BRbJw3puU The agent confirmed exactly what others are saying here - first year only counts earnings after you start getting benefits, and it's a monthly test rather than annual. Totally worth the service to get a definitive answer directly from SSA.

my sister had this happen last year and they only counted what she made after she started taking SS. she retired in may and kept working a weekend job at the grocery store and they didnt care about her january-april income at all

Just want to add something important - make sure you track your earnings carefully. Keep all paystubs and if you're going to be close to the limit, report any changes to SSA immediately. If you go over the limit and they don't catch it until later, you'll end up with an overpayment notice and have to pay back benefits, which is a hassle. Also, remember that the earnings limit only applies until you reach your Full Retirement Age (FRA). After that, you can earn unlimited income with no reduction in benefits. And one last thing - they only count WAGES toward the earnings limit. If you have investment income, pension, annuities, or other non-work income, that doesn't count toward the $23,400 limit.

Also beware that sometimes the SSA automatically withholds benefits if they think you might exceed the limit. When I applied, they asked for my expected earnings. I told them I'd make about $15,000 from my part-time job after starting benefits, and they went ahead and paid me my full benefit. But I have a friend who estimated she'd make $22,000 (just under the limit), and they automatically withheld some of her benefits "just in case" she went over. She had to wait until she filed her tax return the next year to get that money back.

Does anyone know if they count gross income or net income after taxes? I always get confused about this!!

Great thread - lots of helpful info here! I'm in a similar situation and planning to retire at 62 next year. One thing I wanted to add that might help others: if you're unsure about your expected earnings, it's better to underestimate when you apply rather than overestimate. The reason is that if you underestimate and end up earning more, they'll just withhold future benefits to recover any overpayment. But if you overestimate, they might withhold benefits upfront that you're actually entitled to receive, and getting that money back can take months. Also, for anyone doing contract or freelance work after retirement, remember that they count when you EARN the money, not when you receive payment. So if you do work in December but don't get paid until January of the next year, that income counts toward the previous year's limit.

I went through this exact same situation two years ago when I started collecting at 62! The key thing to understand is that SSA uses what's called the "Grace Year" rule for your first year on benefits. Your January-March earnings absolutely DO NOT count toward the $23,400 limit - only earnings from the months you're actually receiving benefits count. Since you're starting in April, only April-December earnings matter. However, here's something important that some comments touched on but didn't fully explain: in that first year, they actually apply a monthly test rather than looking at your total for those 9 months. So each month from April-December, if you earn more than $1,950 in that specific month, you might not get your benefit for that month. This is different from years 2+ where they look at your total annual earnings regardless of which months you earned it. I'd definitely recommend calling SSA to confirm your specific situation, but this Grace Year provision is designed exactly for people like you who are transitioning into retirement mid-year. It's actually pretty generous compared to the regular annual test!

As someone who just went through this process last year, I can confirm what others are saying about the Grace Year rule. The SSA only counts earnings from months when you're actually receiving benefits in your first year. One tip I wish I'd known earlier: when you apply for benefits, they'll ask you to estimate your expected earnings for the remainder of the year. Be as accurate as possible with this estimate. If you significantly underestimate, they might withhold benefits later in the year to account for the overpayment. Also, keep detailed records of your monthly earnings during that first year since it's the monthly test ($1,950/month for 2025). I used a simple spreadsheet to track my part-time income each month to make sure I stayed under the limit. The good news is that after your first calendar year on benefits, it becomes much simpler - they just look at your total annual earnings regardless of timing. But for that first transition year, the monthly approach actually works in your favor since you can potentially earn more than the annual limit would normally allow (up to $1,950 x 9 months = $17,550 in your case if you start in April).

I'm in a very similar situation - planning to start SS at 62 later this year! This thread has been incredibly helpful in clearing up my confusion about the earnings test. I had no idea about the Grace Year rule or that it's a monthly test in the first year rather than annual. One question I haven't seen addressed: if you go over the $1,950 monthly limit in your first year, do they just withhold that one month's benefit, or is there any kind of penalty on top of that? I'm trying to decide whether to be very conservative with my part-time hours or if occasionally going slightly over one month isn't a big deal as long as most months I stay under. Also, has anyone had experience with how quickly SSA processes changes when you need to update your estimated earnings? I'm worried about giving them an estimate now but then having my actual situation change once I start the part-time work. Thanks to everyone who's shared their experiences - this is exactly the kind of real-world guidance that's so hard to find on the official SSA website!

This has been such an informative discussion! I'm 61 and planning to take early retirement next year, so I've been researching the earnings limit rules extensively. One thing I'd add for anyone in a similar situation: if you're planning to do any seasonal work after starting benefits, the monthly test in your first year can actually work to your advantage. For example, if you want to do tax preparation during tax season (January-April) in your second year, you'd be stuck with the annual limit. But if you start benefits mid-year and do that seasonal work in the remaining months of your first year, you can potentially earn more overall since each month is evaluated separately. Also, I've found that the SSA's online retirement estimator tool is really helpful for playing with different scenarios. You can input various start dates and estimated earnings to see how it affects your benefits. It's at ssa.gov/benefits/retirement/estimator.html if anyone wants to check it out. One last tip: make sure you understand how your employer reports wages if you're doing part-time work. Some employers report wages when earned, others when paid. This can matter for which month the earnings count toward if you're right at the monthly limit. It's worth asking your HR department how they handle this.

This thread has been incredibly helpful! I'm 61 and was completely confused about this same issue. Reading everyone's experiences really clarifies how the Grace Year works. One thing I want to confirm based on what I'm reading: if I start taking SS in July at age 62, then for the rest of 2025 (July-December), I can earn up to $1,950 each month from my part-time job without any benefit reduction? And my January-June earnings from my full-time job before I retire don't count at all toward any limit? If that's correct, it means I could potentially earn up to $11,700 (6 months × $1,950) from July-December, plus whatever I made January-June, without any SS benefit reduction in my first year. That seems almost too good to be true! Also wanted to ask - for those who have been through this, do you get any kind of confirmation or documentation from SSA about how they're applying the earnings test? I'm the type of person who likes to have everything in writing, especially when it comes to government benefits. Thanks to everyone for sharing their real-world experiences. This is so much more helpful than trying to decipher the official SSA publications!