Social Security earnings limit confusion - monthly vs annual for early retirement at 65
I started collecting Social Security retirement benefits this January (2025) at age 63. My Full Retirement Age is 67 and 2 months, but I decided to take benefits early. Now I've been offered a great part-time position at my friend's business, and I'm confused about the earnings limit. The SSA rep I talked to mentioned something about different rules for the first year versus subsequent years. I think she said there's a monthly earnings limit (around $2,300/month) for the first calendar year, but then it switches to an annual limit (roughly $27,500/year) starting next January. Can someone confirm if I'm understanding this correctly? Does it really switch from monthly to annual after the first year? I don't want to accidentally trigger any benefit reductions or have to pay anything back. The job would pay about $2,000 per month.
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James Johnson
You've got it mostly right! Since you're receiving benefits before your Full Retirement Age (FRA), you are subject to the earnings test. There are two different rules: 1. In the first calendar year you receive benefits, SSA applies a monthly test. For 2025, you can earn up to $2,340 per month without affecting your benefits. This is helpful for people who retire mid-year. 2. In all years after that first year (so starting January 2026 for you), only the annual limit applies - $28,080 for 2025 (will be slightly higher for 2026). Since you'll be making around $2,000 monthly at your part-time job, you should be under the monthly limit for 2025. And your annual earnings would be around $24,000, which should also be under the annual limit for next year.
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Emily Nguyen-Smith
•Thank you so much for clearing that up! So if I understand correctly, as long as I stay under $2,340 per month for 2025, I'm fine even if I work all year (which would be $24,000 total for the year)? And then in 2026, they just look at my total earnings for the year rather than month-by-month?
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Sophia Rodriguez
I went through this EXACT situation last year and let me tell you IT WAS A NIGHTMARE!!! The SSA doesn't explain this clearly at all. I thought I was fine because I stayed under the monthly limit but then they said I went over the annual limit and TOOK BACK $4,800 of my benefits!!!! The whole system is designed to confuse people and take back money. Be VERY careful with your earnings and document EVERYTHING.
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Mia Green
•That sounds awful! Did u ever get it sorted out? I'm in a similar spot and now I'm worried.
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Sophia Rodriguez
•After SIX MONTHS of fighting with them, they finally admitted their mistake. They were applying both tests at the same time which isn't how it's supposed to work. Had to talk to THREE different supervisors before someone knew the actual rules!!!
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Emma Bianchi
One important detail - the earnings limit only applies to wages or self-employment income. It doesn't count pensions, investments, interest, annuities, capital gains or other government benefits. Also, Social Security only withholds $1 in benefits for every $2 you earn above the limit, not dollar-for-dollar. If you do exceed the limit, SSA typically will withhold entire monthly checks at the beginning of the next year until they've recovered the appropriate amount, rather than taking a little from each month's check.
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Emily Nguyen-Smith
•That's really helpful to know! I wasn't sure how they would collect if I went over. So they'd take full checks from me in 2026 if I exceed the limit in 2025? And is there any way to know in advance which months they'd withhold?
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Emma Bianchi
•Yes, typically they'll withhold full monthly payments starting January of the following year until they've collected what's owed. They should send you a letter in advance telling you which months will be affected. You can also call and request a specific withholding schedule if the default one would cause hardship.
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Lucas Kowalski
i think ur forgetting the grace year thingy. my brother had some special deal his first year where he only had to worry about months he actually earned too much and it didnt matter what he made for the year. something about the grace year. u should check if that applies to u
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James Johnson
•You're absolutely right! What you're referring to is actually exactly what the original poster was asking about. In the first year of receiving benefits, SSA applies the monthly earnings test (sometimes informally called the "grace year" rule), which is more favorable for people who retire mid-year or work irregularly. After that first year, only the annual test applies.
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Olivia Martinez
When I started getting my SS at 63, I was so confused about all these rules that I put off going back to work for almost a year. Wish I had just called SSA directly but I could never get through to a real person. Spent HOURS on hold and kept getting disconnected. So frustrating!
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Charlie Yang
•I had the same problem trying to reach SSA about my earnings limits. After 4 failed attempts, I used Claimyr (claimyr.com) and finally got through to someone at Social Security in about 20 minutes. They have this system that holds your place in line and calls you back when an agent is available. Saved me hours of frustration. They have a video showing how it works here: https://youtu.be/Z-BRbJw3puU The agent I spoke with explained the monthly earnings test vs. annual test difference clearly, and it matches what others here have said. First calendar year = monthly test, subsequent years = annual test.
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Olivia Martinez
•Wow, never heard of that service. Will definitely check it out next time I need to talk to SSA. Anything to avoid those endless hold times!
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Mia Green
Dont forget that once u hit your FRA none of this matters anymore! U can earn as much as u want with no penalty. Thats why some ppl wait till FRA to collect. But sounds like ur a few yrs away from that still.
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Emily Nguyen-Smith
•That's right - I'm still about 4 years away from my Full Retirement Age. I'll definitely keep track of my earnings until then. The part-time job is perfect because it keeps me at just the right income level while still giving me something to do!
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Grace Patel
My brother in law took SS early at 62 and was working part time. His boss offered him extra hours for just one month during their busy season, and he went over the monthly limit by about $500. He didn't realize it would affect his benefits since it was just one month. He lost his ENTIRE benefit payment for that month! So definitely be careful and track your monthly income closely that first year.
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Emma Bianchi
•This is an important warning, but I want to clarify something: exceeding the monthly limit in one month during that first year only affects benefits for that specific month. It doesn't impact benefits for other months where earnings are under the limit. Also, SSA looks at gross earnings when they're earned, not when they're paid - so a December bonus would count for December even if paid in January.
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Emily Nguyen-Smith
Thanks everyone for all this helpful information! I'll make sure to keep my earnings under $2,340 each month during 2025, and then stay below the annual limit for 2026 and beyond. I'm going to keep careful records of all my earnings and I'll ask my employer to help make sure I don't accidentally go over. This part-time job sounds like it will work out perfectly with these limits. Really appreciate all the detailed explanations and personal experiences!
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