Social Security earnings limit confusion at 65 - will my $36,000 income reduce my SS benefits?

You're right to be concerned about the earnings test. For 2025, if you're under Full Retirement Age for the entire year, the limit is $24,300. But since you're turning 65 this year, you'll be subject to a different rule. In the year you reach FRA, the earnings limit is much higher (around $65,000 for 2025), and it only applies to earnings in the months BEFORE you reach FRA. So if you turn 65 in August, only your earnings from January-July count toward the limit. If you do exceed the relevant limit, SSA reduces benefits by $1 for every $2 earned over the limit for people under FRA for the full year, or $1 for every $3 earned over the higher limit in the year you reach FRA. Remember though, this isn't a permanent reduction. Once you reach your Full Retirement Age, you'll get the money back gradually through increased monthly benefits.

no no no the other reply is wrong. 65 isnt FRA for you if your turning 65 this year! FRA is 66 and 2 months for people born in 1960. so you'll have the lower limit until you hit your actual FRA next year. my brother got caught by this and lost a ton of$$

Just to clarify exactly how the reduction works if you earn over the limit: if you earn $36,000 in 2025 while collecting Social Security before your FRA, you'll be $11,700 over the $24,300 limit. That means SSA will withhold $5,850 of your benefits ($1 reduction for every $2 over the limit). The withholding isn't spread evenly - they'll actually withhold full monthly checks from the beginning of the year until the withholding amount is satisfied, then resume your regular payments. Also important - any benefits withheld are not lost forever. Once you reach your Full Retirement Age, SSA will recalculate your benefit amount to credit you for the months when benefits were withheld.

I went through this EXACT same situation last year. Yes, they hold ENTIRE checks at the beginning of the year if you're going to be over the limit! It was a huge shock when I didn't get my first 3 months of payments. No one warned me about this!!! Btw after spending days trying to reach someone at SSA to explain this to me (kept getting disconnected or waiting HOURS), I found this service called Claimyr that got me through to a real person at SSA in under 20 minutes. You can see how it works here: https://youtu.be/Z-BRbJw3puU and their site is claimyr.com. Seriously saved my sanity when trying to figure out my benefit situation.

My 2 cents - just wait until your full retirement age!!! I tried getting benefits at 65 while still working and it was a NIGHTMARE dealing with SSA and their complicated rules. The amount you lose with the earnings test plus the permanently reduced benefit from claiming early just isn't worth the hassle.

Does anyone know if 401k withdrawals count as "earnings" for the Social Security earnings limit? I'm in a similar situation and trying to figure out if I can take some 401k distributions without affecting my benefits.

After reading all your responses, I'm leaning toward waiting until my Full Retirement Age now. The combination of the earnings test withholding whole checks plus the permanent reduction for claiming early doesn't seem worth it. I'm healthy and both my parents lived into their 90s, so maximizing my lifetime benefits probably makes more sense. One last question - if I do decide to claim at 65 despite the earnings limit, do I need to notify SSA about my expected earnings when I apply? Or do they just find out when tax returns are filed?

why is this system so COMPLICATED??? I swear they make it confusing on purpose so people mess up and lose money. i'm 63 and give up trying to understand when i should file. probably just gonna wait till 70 and avoid this headache!!!

I'm in a very similar boat - turning 65 next month and trying to navigate this maze! Reading through everyone's responses has been incredibly helpful. It sounds like the consensus is that waiting until Full Retirement Age makes the most financial sense, especially if you're healthy and expect to live a long life. One thing I'm curious about - has anyone here actually gone through the process of having benefits withheld due to the earnings test? I'd love to hear more real-world experiences about how SSA handles the communication and whether they give you advance notice before withholding checks. Also, @Ethan Brown, have you considered reducing your consulting work to stay under the $24,300 limit instead of stopping work entirely? That might be a middle ground that lets you claim benefits while still earning some income.

As someone who works in retirement planning, I'd strongly recommend running the actual numbers before making your decision. While waiting until FRA is often the "safe" answer, your specific situation might be different. Here's what I'd calculate: Compare your total benefits over 10-15 years under each scenario - claiming at 65 with earnings test vs waiting until 66+2. Don't forget that even with the permanent reduction for early claiming, you'd be receiving 14 months of payments that you wouldn't get by waiting. The break-even point isn't always as far out as people think, especially if you factor in the time value of money. If you can invest those early Social Security payments, the math can shift in favor of claiming early even with the earnings test. That said, given your consulting income puts you significantly over the limit, @Leila Haddad's suggestion about reducing work to stay under $24,300 is definitely worth exploring. You might find that sweet spot where total income (reduced consulting + full SS) exceeds what you'd make waiting for FRA.

Reading through this thread has been eye-opening! I'm 62 and was planning to file at my FRA, but seeing all the complexity around the earnings test makes me grateful I have a few more years to plan this out properly. One resource that might help everyone here is the Social Security Administration's online Retirement Estimator tool. You can plug in different scenarios (claiming at 65 vs FRA vs 70) and see projected monthly benefits. While it doesn't factor in the earnings test complexities, it gives you a baseline for running those break-even calculations @Connor O'Reilly mentioned. @Ethan Brown, given all the great advice here, have you been able to narrow down which direction you're leaning? The reduced consulting work option seems like it could be a real winner if the numbers work out. And definitely agree with getting professional help to run the calculations - this is way too important (and complicated) to wing it!

This entire discussion has been incredibly educational! I'm turning 64 next year and was completely unaware of how complex the earnings test could be. The idea of having entire monthly checks withheld upfront rather than just a proportional reduction each month was particularly shocking - that's definitely not how I imagined it working. @Ethan Brown, I hope you don't mind me jumping in, but I wanted to add one consideration that hasn't been mentioned yet: the impact on Medicare Part B premiums. If you're planning to enroll in Medicare at 65, your Part B premiums are based on your income from two years prior, but future income changes could affect IRMAA surcharges down the road. Since you're earning $36k from consulting, this probably won't push you into higher premium brackets, but it's worth factoring into your overall financial planning. The suggestion about reducing your consulting work to stay under the $24,300 limit really does seem like it could be the sweet spot. Even if you had to turn down some projects, the combination of partial consulting income plus full Social Security benefits might exceed what you'd get from full consulting with withheld SS payments. Has anyone here actually tried to precisely manage their income to stay just under the earnings limit? I'm curious how difficult that is in practice, especially for consultants whose project income can be unpredictable.