Social Security earnings limit in FRA year - monthly vs annual limits when still working?

You're asking a great question about a commonly misunderstood rule. In the year you reach your Full Retirement Age (FRA), Social Security applies TWO different rules: 1. Before your FRA month (January-August 2025 in your case): A higher annual limit applies ($62,760 estimated for 2025) with a $1 reduction for every $2 over the limit. 2. Month of FRA and after (September-December 2025): There is NO earnings limit once you reach your FRA month. So you can earn unlimited amounts starting in September without any benefit reduction. For January-August, they'll only count earnings during those months toward the annual limit. Your HR department is partially right - there are both monthly considerations and an annual limit, but they work together in a specific way.

WAIT - I thought the earnings test doesn't apply AT ALL in the year you reach FRA??? My brother got his SS last year when he turned 66 and 4 months and his benefits weren't reduced despite making over $100k. Are you SURE about this? I'm turning my FRA next year too and don't want to mess this up!!!

I went through this exact headache last year. Different SSA reps told me different things each time I called. I'd suggest using Claimyr (claimyr.com) to get through to SSA quickly - they got me connected to a knowledgeable rep in under 10 minutes who explained everything. You can see how it works in their video demo: https://youtu.be/Z-BRbJw3puU The rep confirmed that in my FRA year, only earnings prior to my birth month counted toward the earnings test. Once I hit my FRA month, I could earn unlimited amounts. Definitely worth getting this clarified directly from SSA before making your decision.

They just look at the months before ur FRA month for the limit. After ur birthday month u can make a million $ and they don't care lol. But yeah till Sept they'll count what u make toward that limit.

To clarify what others have said and address your specific situation: 1. For January-August 2025: SSA will count your earnings during these 8 months (approximately $56,667 if your $85,000 salary is evenly distributed) against the special higher limit for FRA year ($62,760 estimated for 2025). 2. For September-December 2025: No limits apply whatsoever. Since your 8-month earnings ($56,667) would be below the special FRA-year limit ($62,760), you would not face any benefit reductions even if you started benefits in January 2025. One important note: They don't apply monthly limits individually - they look at the cumulative earnings before FRA month and compare that total to the annual limit.

My sister works in payroll and she was telling me there's also something about how they calculate which month the money counts for? Like if you get paid on the 1st for work done the previous month? Maybe check on that too?

And don't forget if they DO reduce your benefit because of earnings, you'll get that money back later!!! My financial advisor explained that any benefits withheld from earnings test aren't actually lost - SSA recalculates and increases your monthly amount once you reach FRA to account for those months they withheld benefits. Lots of people don't know this!!

Based on all the information shared, here's what applies to your specific situation: 1. With FRA in September 2025 and annual earnings of $85,000 (approximately $7,083/month): - January-August earnings: ~$56,667 - Special higher earnings limit for FRA year: ~$62,760 - Since $56,667 < $62,760, no benefit reduction would apply 2. Starting September 2025, unlimited earnings allowed with no impact on benefits. 3. You could safely begin benefits at any point in 2025 without reduction due to earnings. Ideally, you should verify these numbers with SSA directly as the 2025 earnings limit isn't officially announced yet (I'm using estimates based on typical COLA increases).

Just wanted to add one more important detail that might help with your planning - make sure to consider the timing of when you actually file for benefits versus when you want them to start. You can file up to 4 months before you want benefits to begin, which can help avoid any processing delays. Since you're planning to start in September, you could file as early as May 2025 to ensure everything is processed smoothly. Also, if you do decide to start benefits earlier in the year, SSA will automatically adjust for any overpayment if your actual earnings end up being different from what you initially reported. The system is designed to true-up at the end of the year, so you won't be permanently penalized for estimation errors.

One thing I haven't seen mentioned yet is that your employer might also have some flexibility in how they handle your situation. Since you're concerned about the earnings limits, you could potentially ask HR about deferring some compensation (like bonuses or raises) until after September when the earnings test no longer applies. Some employers are willing to work with employees approaching FRA to help optimize their Social Security benefits. You might also want to consider whether any of your compensation comes from sources that don't count toward the earnings test - things like pension payments, investment income, or certain types of deferred compensation aren't subject to these limits. It's worth having a detailed conversation with both HR and a financial advisor to make sure you're maximizing your benefits while avoiding any unnecessary complications with the earnings test.

I'm in a very similar situation - turning 67 in October 2025 and still working full-time. After reading through all these responses, I want to share what I learned from my own research that might help clarify things further. The key insight is that SSA uses what's called the "earnings test exempt amount" which is different for the year you reach FRA versus other years. For 2024, the regular annual limit was $22,320, but the special higher limit for your FRA year was $59,520. The 2025 amounts should be announced in October, but they'll likely be around $62,760 as others mentioned. What really helped me understand this was looking at SSA Publication 05-10069 "How Work Affects Your Benefits" - it has clear examples of exactly how they calculate this for people in our situation. One thing I'd add is to keep detailed records of your monthly earnings throughout 2025, especially if you have any irregular income like bonuses or overtime. This will make it much easier to provide accurate information to SSA and avoid any confusion later.

One additional consideration that might be helpful for your planning - since you're making $85,000 annually and turning 67 in September, you should also think about the tax implications of when you start your benefits. Starting benefits in September versus January could affect your tax liability for 2025, especially since you'll have both earned income and Social Security benefits in the same year. Up to 85% of your Social Security benefits could be taxable depending on your "combined income" (adjusted gross income + nontaxable interest + half of SS benefits). With your salary level, you'll likely hit the higher taxation threshold. You might want to run some tax projections for both scenarios - starting benefits in January versus September - to see which timing works better for your overall financial situation. Sometimes the earnings test considerations are just one piece of the puzzle, and the tax impact can be significant enough to influence your decision even when you're under the earnings limits.