Social Security earnings limit confusion - does PTO payout count against $23,400 limit in 2025?

Yes, your PTO payout absolutely counts against your earnings limit for 2025. The SSA counts income in the year it's received, not when it was earned. So that PTO payout that came on January 2, 2025 gets counted toward your 2025 earnings limit of $23,400. Regarding when they deduct, SSA typically doesn't take the money immediately when you go over. Instead, they'll usually do a reconciliation the following year once they receive wage information, and then they'll withhold future benefits to recover any overpayment. So if you go over in 2025, you might see reduced payments in 2026 until they recover the amount. My suggestion: subtract that PTO payout amount from your $23,400 limit and then carefully track your earnings throughout the year to make sure you stay under the adjusted limit.

I think your PTO counts but not 100 percent sure. I had something similar when I retired but mine was sick leave that got paid out and my accountant said it didnt count for social security stuff but maybe PTO is different?? Good luck

In my experience with this exact situation, yes, you absolutely must count that PTO payout toward your annual earnings limit. SS doesn't care when the money was earned - only when you received it. And yes, they will deduct $1 for every $2 over, but they won't do it right away. Here's how it typically works: You'll file your taxes for 2025 early next year. The SSA will eventually get that information and see if you went over. If you did, they'll calculate how much you need to pay back and will usually withhold that amount from future checks until it's repaid. If you know for sure you're going to be over, you can contact them proactively to set up a repayment plan. Sometimes it's actually better to just go slightly over if it means earning substantially more money, since you only lose $1 for every $2 you earn over the limit.

same thing happened to me last year!!! yes the PTO counts and it SUCKS. i wish someone had told me b4 i retired cuz i wouldve taken that time off instead of getting paid for it lolol. now i gotta be super careful with my hours at my walmart job

I've been dealing with the earnings limit nonsense for 2 years now and let me tell you, it's a complete NIGHTMARE. The SSA makes this way more complicated than it needs to be! Yes, your PTO counts. Bonuses count. Holiday pay counts. Pretty much EVERYTHING counts except actual investment income. And here's the kicker - they don't typically reduce your benefits in real-time. They wait until the following year, match up your earnings with IRS data, and then hit you with a massive overpayment notice demanding thousands back! Then you're scrambling to figure out how to pay it back or appeal. The whole system is designed to trip us up!

Have you tried calling the SSA directly? I had a similar question last month about my severance package, and I spent THREE DAYS trying to get through to a real person. Would call at 7am when they opened and still got the "we're experiencing high call volume" message. I finally discovered a service called Claimyr that got me through to an agent in about 20 minutes instead of waiting on hold for hours. You can check them out at claimyr.com - they have a video showing how it works at https://youtu.be/Z-BRbJw3puU. The agent I spoke with confirmed that yes, all forms of payment received in 2025 (including PTO payouts) count toward your annual earnings limit. Definitely worth getting the official answer.

Let me clarify how the earnings test works since there's some confusion here: 1. Yes, the PTO payout counts toward your 2025 earnings limit because you received it in 2025. 2. For the earnings test, SSA counts GROSS wages when they're paid, not when earned. This includes regular wages, bonuses, commissions, PTO payouts, etc. 3. Regarding the withholding: When SSA determines you've exceeded the limit, they typically withhold full monthly benefit checks (not partial ones) until they've recovered the appropriate amount. The reduction is $1 for every $2 over the limit. 4. If you know you'll exceed the limit, you can request a Rate of Withholding change where they reduce your benefits in advance to avoid a larger overpayment later. 5. Remember: this only applies until you reach your Full Retirement Age. The year you reach FRA, the limit is much higher, and after FRA there's no limit at all.

SSA only looks at GROSS earnings, regardless of tax withholding. Increasing your tax withholding won't help with the earnings test. The only way to stay under the limit is to actually earn less gross income during the year.

I forgot to mention something important!! My friend told me she just stopped reporting her income to Social Security and they never caught on. Maybe you could try that??? jk don't do that lol

I went through this exact same situation when I started collecting early at 62! Yes, your PTO payout definitely counts toward the $23,400 limit since you received it in 2025. The SSA is very clear that they count income based on when it's RECEIVED, not when it was earned. One thing I learned the hard way - keep meticulous records of ALL your earnings throughout the year. I use a simple spreadsheet to track every paycheck, bonus, and any other income. It's saved me so much stress when dealing with SSA later. Also, since you're planning carefully, you might want to consider having your part-time employer withhold a bit extra for taxes since you'll have both work income AND Social Security benefits this year. The tax situation can get tricky with multiple income sources. Good luck navigating this - the earnings test is definitely one of the more confusing parts of early retirement with Social Security!

I'm going through this exact same situation right now! Started collecting at 64 in December and got hit with a surprise PTO payout in January that I totally forgot would count toward my earnings limit. It's so frustrating because you think you've planned everything out and then BAM - there goes a huge chunk of your allowable earnings for the year. One thing I discovered that might help you - if you're working part-time and have some control over your schedule, try to spread your remaining earnings evenly throughout the year rather than working more hours early on. That way if any unexpected income comes up (like overtime or a small bonus), you have more flexibility to reduce hours later without completely stopping work. Also, I'd strongly recommend getting everything in writing from SSA about your specific situation. I called three different times and got slightly different answers each time, which made me even more confused. At least with your PTO situation, everyone here seems to agree it counts, but for any future questions you might have, definitely get the official SSA response documented somehow. The whole earnings test system really needs to be simplified - it's way too confusing for people who are just trying to transition into retirement responsibly!

I'm in a similar situation and just wanted to share what I learned from my own research and experience. The PTO payout definitely counts toward your 2025 earnings limit - this caught me off guard too when I first started collecting benefits. One thing that might help with planning: SSA has a really useful online tool called the "Retirement Earnings Test Calculator" on their website that lets you input your expected earnings and see how it affects your benefits. I wish I'd known about it earlier! Also, since you mentioned you're 65 and not yet at FRA, remember that once you DO reach your full retirement age, any benefits that were withheld due to the earnings test will be recalculated and you'll get credit for those "lost" months through a higher monthly benefit amount. So even if you do go over the limit at some point, it's not money that's gone forever - it's more like a temporary reduction that gets made up later. The system is definitely confusing, but it sounds like you're being really thoughtful about tracking everything carefully. That's going to serve you well!

I wanted to add something that might be helpful for your planning - you mentioned getting that PTO payout on January 2nd, which definitely counts toward your 2025 limit. But here's something to keep in mind: if you have any control over when you receive future payments from your part-time job, the timing can actually matter for planning purposes. For example, if your part-time employer pays bi-weekly and you're getting close to the limit late in the year, you might be able to ask them to delay your final paycheck until January 2026 (assuming you'll be closer to FRA by then with a higher limit). Obviously this only works if you can afford to wait for that money, but it's a strategy some people use. Also, make sure you understand how your employer reports your earnings to SSA. Sometimes there can be discrepancies between what you think you earned and what gets reported, especially with things like pre-tax deductions. The SSA goes by what's in Box 1 of your W-2 (wages subject to federal income tax), which might be slightly different from your gross pay if you have things like health insurance or retirement plan deductions. The whole system really is more complex than it needs to be, but it sounds like you're asking all the right questions and being proactive about tracking everything!

I just want to echo what others have said - yes, your PTO payout absolutely counts toward your 2025 earnings limit. I learned this the hard way when I retired at 63 and got a surprise vacation payout that ate up nearly half my allowable earnings for the year! One suggestion that really helped me: contact your part-time employer NOW and ask them to provide you with a year-to-date earnings statement every month or quarter. Some payroll systems make this easy to generate, and it helped me stay on top of exactly where I stood throughout the year. I also asked HR to flag my account so they'd give me a heads up before any unexpected payments (like holiday bonuses or overtime) that might push me over the limit. Also, since you're being so careful about tracking everything, don't forget that if you have any 1099 income from freelance work, consulting, or even things like jury duty pay - that all counts too. The SSA casts a pretty wide net when it comes to what constitutes "earnings" for the annual limit test. Good luck with your first year navigating this! It gets easier once you have a system in place for tracking everything.

I'm just starting to navigate this whole Social Security earnings limit situation myself, so I really appreciate seeing everyone's experiences and advice here! I'm turning 62 next year and was planning to start collecting benefits while working part-time, but reading about all these PTO payout surprises and the complexity of tracking everything is honestly a bit overwhelming. One question I have after reading through all these responses - does anyone know if there are any good resources or books that explain all the Social Security rules in plain English? It seems like even calling SSA directly gives you different answers depending on who you talk to, so I'm wondering if there's a more reliable source to learn about all these scenarios before I make the leap. Also, for those of you who have been dealing with this for a while - do you think it's worth it to start collecting early and deal with all the earnings limit complexity, or is it better to just wait until full retirement age when there's no limit? I know everyone's financial situation is different, but I'm curious about your perspectives on whether the hassle is worth it.

I'm also navigating the early Social Security collection maze and wanted to share something that helped me stay organized - I created a simple monthly budget tracker that includes my Social Security benefit amount, my part-time work earnings, and a running total of my annual earnings against the $23,400 limit. What really helped was setting up "warning zones" - like when I hit 75% of my annual limit, I know I need to start being extra careful about overtime or any unexpected income. And at 90%, I basically stop taking on any extra hours. One thing I learned from my neighbor who went through this - if you're getting close to the limit near the end of the year, you might want to consider asking your employer to defer some December earnings to January of the following year (assuming you'll have more room in your limit then). Obviously this only works if you can afford the delay and your employer is flexible, but it's another tool in the toolkit. The PTO payout counting toward your limit is definitely frustrating - it feels unfair since you earned that time off in previous years. But the silver lining is that now you know exactly where you stand and can plan accordingly. Better to find out now than get surprised by an overpayment notice next year!

I just went through this exact situation last year when I started collecting at 64! Your PTO payout absolutely does count toward your 2025 earnings limit - I learned this the hard way when my final payout from my old job ate up about $4,000 of my allowable earnings for the year. Here's what I wish someone had told me: keep detailed records of EVERYTHING, including that PTO payout amount, and subtract it from your $23,400 limit right away so you know exactly how much you can earn from your part-time work. I made the mistake of not tracking carefully at first and ended up having to drastically cut my hours in November when I realized I was getting too close to the limit. Also, a tip that saved me - if your part-time job offers direct deposit, ask them to email you a pay stub summary each month. It makes tracking so much easier than trying to calculate everything from memory. The earnings limit really is one of the most stressful parts of early retirement, but once you have a good tracking system in place, it becomes much more manageable. Good luck with your first year navigating this!

I'm new to this community but have been following Social Security rules closely as I approach retirement myself. Based on everything I've researched and what others have confirmed here, your PTO payout definitely counts toward your 2025 earnings limit since you received it in 2025, regardless of when it was actually earned. One thing I haven't seen mentioned yet that might be helpful - if you're using tax software like TurboTax or working with a tax preparer this year, make sure to mention your Social Security situation to them early. They can help you plan for the tax implications of having both SS benefits and work income, and some of the newer software versions actually have calculators that can help you model different earning scenarios throughout the year. Also, since you're being so methodical about tracking (which is smart!), consider setting up a simple alert on your phone for the last day of each month to update your earnings tracker. It only takes a few minutes but keeps you from falling behind on the math when you're busy with work and life. The $23,400 limit really doesn't leave much room for error, especially after that PTO payout, so staying on top of it monthly rather than trying to catch up quarterly will save you stress later.