Social Security earnings limit confusion - monthly vs. annual tracking of $23,400?

They track it on an annual basis, not monthly. The annual limit for 2025 is indeed $23,400 if you're under your Full Retirement Age (FRA). The monthly breakdown is just a simplified way of thinking about it. So you can earn $5,000 in January and nothing the rest of the year, and you'll be fine as long as your total stays under $23,400 for the year. SSA will only start withholding benefits after you exceed the annual threshold. However, there is one exception - the first year you claim benefits has a monthly earnings test. So if you start benefits in January 2025, for that year only, they'll look at whether you earn over $1,950 in any individual month. After your first year on benefits, it switches to the annual calculation.

The person above is partly wrong. There are actually TWO different earnings tests: 1. The annual test for everyone ($23,400 for 2025) 2. A monthly test that ONLY applies in the first year you retire In your first year, if you earn over $1,950 in any month, you won't be considered "retired" for that month and might not get benefits. After the first year, only the annual test matters. This monthly test is designed for people who retire mid-year and might have had high earnings before retirement that would otherwise disqualify them under just the annual test.

they will take away $1 for every $2 you earn over the limit. at least thats what they did to my husband when he went over last year

I went through this exact situation last year. Here's how it actually works: For the FIRST year you're entitled to benefits, you can use the monthly earnings test if it benefits you. If you earn over the monthly limit ($1,950 in 2025) in any month, you won't receive benefits for that month. However, if you're starting in January 2025, and working throughout the year, then only the ANNUAL limit ($23,400) will really matter to you. They'll calculate if you went over at the end of the year, and if you did, they'll withhold $1 in benefits for every $2 you earned over the limit. The monthly test is mostly helpful for people who retire mid-year and had high earnings before retirement. Also, remember this all goes away once you reach your Full Retirement Age - then you can earn unlimited amounts without penalty.

I HAD THE EXACT SAME QUESTION LAST YEAR!! I called Social Security 7 TIMES and got 4 DIFFERENT ANSWERS!!! One agent told me monthly limits, another said annual, a third said something completely different. The phone system is IMPOSSIBLE - waited on hold for 3+ hours each time only to be disconnected twice! Finally got through to someone who seemed to know what they were talking about. Confirmed it's an ANNUAL limit once you're past the first year. First year has special rules if you retire mid-year.

Everybody saying different things here... let me simplify. If you start benefits in January, the annual limit applies. The monthly limit is for people who retire mid-year and have big earnings before retiring. So yes, your earnings can go up and down each month, just keep the TOTAL under $23,400 for the year and you'll be fine.

To respond to your follow-up question: Yes, that's exactly right. Since you're starting in January, you'll only need to worry about the annual total of $23,400. Your monthly earnings can fluctuate above and below $1,950 as long as the annual total stays under the limit. The monthly earnings test is really designed to help people who retire mid-year and had high earnings before retiring. For example, someone who earned $60,000 January-July and then retired in August would normally exceed the annual limit and get no benefits, but with the monthly test, they can get benefits for August-December if their monthly earnings stay below the limit during those months. If you're planning to consistently work throughout the year, just focus on keeping your annual total under $23,400 and you'll be fine. SSA will review your earnings after the year ends, typically when you file your tax return.

my sister inlaw kept working after she started ss and they took back 7 months of payments from her the next year. be careful!

One more important thing to understand: if they do withhold some of your benefits because you exceed the earnings limit, it's not lost forever. They'll recalculate and increase your monthly benefit when you reach your Full Retirement Age to account for the months they withheld benefits. And remember, the earnings limit only applies to wages or self-employment income. It doesn't apply to investment income, pension payments, or other non-work income. Good luck with your seasonal work pattern - sounds like you've got a good handle on it now!