Social Security earnings limit only applies until FRA? Confused about retirement income rules

The earnings limit ONLY applies until you reach your Full Retirement Age (FRA). After that, you can earn as much as you want with no penalty or reduction to your benefits, even if you initially filed early. If you go over the limit before reaching FRA, Social Security will withhold $1 in benefits for every $2 you earn above the annual limit. In the calendar year you reach FRA, the rules are more lenient - they only withhold $1 for every $3 you earn above a higher limit ($62,760 in 2025), and they only count earnings in the months before your FRA month. The good news is that any benefits withheld aren't lost forever. Once you reach FRA, Social Security will recalculate your benefit amount to credit you for the months when benefits were withheld.

my sister had this same problem last yr, she was 64 and working and they took back a bunch of her ss money when she filed taxes! she had no idea about the limit and was really counting on that money. i think its really unfair that ssa doesnt explain this better to people!!

Just wanted to add some clarity on how the withholding actually works in practice, since this confuses many people: When you exceed the earnings limit, SSA doesn't request money back - instead, they stop your monthly payments until they've withheld the required amount. For example, if you earn $5,000 over the limit, they need to withhold $2,500 (half the excess). If your monthly benefit is $1,500, you'd miss about 2 months of payments. SSA typically makes these adjustments after you file your tax return showing your actual earnings. That's why some people get surprised when their benefits suddenly stop for a period. It's important to report expected earnings in advance so they can spread out any withholding throughout the year rather than all at once.

Yes, the recalculation at FRA is automatic. What happens is they effectively credit you for the months you didn't receive benefits due to withholding. It's similar to having delayed filing for those months. For example, if you claimed at 63 but had 8 months worth of benefits withheld due to excess earnings before reaching FRA, when you reach FRA, they'll recalculate your benefit as if you had claimed 8 months later than you actually did. This results in a higher monthly payment going forward. You don't need to request this adjustment - SSA should make it automatically in the month you reach your FRA. However, it's always good to check your benefit amount after your FRA month to make sure the adjustment was properly applied.

Im confused about something - do they count ALL income for the earnings limit or just wages? I have rental property income plus a part time job, but my cousin said only the job counts toward the limit?

I just went through this last year and learned the hard way. I filed at 62 and was still working part-time at Walmart. Ended up making about $4,000 over the limit and they stopped my payments for almost 3 months! The worst part was they didn't tell me this would happen, just suddenly no deposit one month. Took me DAYS to reach someone at SSA to figure out what happened. My advice - track your earnings carefully and report them to SSA in advance!

Since we're discussing the earnings limit, I'd like to clarify one more important point: the limit is significantly higher in the calendar year you reach FRA, and only applies to months before your birthday. For example, in 2025: - Regular early retirement earnings limit: $23,520/year - Limit in year you reach FRA: $62,760 (and only counting earnings before your FRA month) Also, be aware that the earnings limit typically increases each year with inflation. So if you're planning several years in advance, expect these numbers to rise somewhat.

Thanks everyone for all the helpful information! I think I understand how it works now: 1. The earnings limit applies from when I claim at 63 until I reach my FRA at 67 2. Only wages count, not other income like investments or rentals 3. If I go over the limit, they'll withhold some benefits 4. When I reach FRA, I'll get credit for those withheld benefits 5. After FRA, I can earn unlimited income with no penalty I'm going to carefully plan my work hours to stay under the limit for those 4 years. Really appreciate all the advice!