Social Security earnings limit penalty at 62 - how do they return withheld benefits after FRA?
I started collecting Social Security at 62 last year (2024) but I'm still working part-time. My HR department just informed me that I'll go over the annual earnings limit by about $8,500 this year, which means SSA will withhold about $4,250 of my benefits ($1 for every $2 over). I understand that once I reach my full retirement age (67 in my case), I'm supposed to get this money back somehow through increased monthly payments. But I'm totally confused about how this actually works. Does SSA automatically recalculate? Do I need to file something? And how exactly do they determine the amount of the increase? Also, if I keep working and exceeding the limit for the next few years before hitting FRA, do all those withheld amounts get factored in too? The SSA website is super vague about this process. Thanks for any help explaining this!
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Samuel Robinson
The process is actually pretty straightforward. When you reach your full retirement age (FRA), the SSA will automatically recalculate your monthly benefit amount to credit you for the months where benefits were withheld due to the earnings test. You don't need to file anything. They essentially adjust your starting date for benefits. For example, if you had 6 months of full benefits withheld between age 62 and FRA, they would recalculate as if you started benefits 6 months later than you actually did. This results in a higher monthly payment going forward after FRA. And yes, all withheld amounts from all years get factored in. So if you continue working and exceeding the limit, those additional withheld amounts will also be included in the recalculation when you reach FRA.
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Victoria Brown
•Thanks for the clear explanation! So just to make sure I understand correctly - if I have benefits withheld for the equivalent of 8 full months between now and my FRA, they'll recalculate as if I started at 62 and 8 months instead of 62? And this happens automatically when I turn 67?
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Camila Castillo
they dont give u the money back in a lump sum, they just bump up ur monthly payment after u hit full retirement age. its confuzing but basically ur payment goes up like u waited longer to file. its all automatic, u dont have to do anything
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Brianna Muhammad
•This is correct but I want to add a bit more detail. When your benefits are withheld due to excess earnings, it's as if you didn't receive benefits for those months. The SSA tracks the total dollar amount withheld, then figures out how many months that represents based on your benefit amount. At FRA, they recalculate your benefit as if you claimed later than you actually did. For example, if your monthly benefit at 62 was $1,500 and you had $4,500 withheld before FRA, that's equivalent to 3 months of benefits. When you reach FRA, they'll recalculate your benefit as if you started at 62 years and 3 months, not 62. This gives you a higher monthly amount for the rest of your life.
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JaylinCharles
I went through this exact process last year. The SSA does handle it automatically when you reach FRA, but I recommend keeping detailed records of any benefits withheld due to excess earnings. In my case, I had benefits withheld for about 11 months total between age 62 and my FRA. When I hit FRA, my monthly benefit increased by about 6% to account for this. It was like they recalculated my starting age to be 63 instead of 62. One important thing: the recalculation happens the month you reach FRA, not at the beginning of the year you reach FRA. And the increase is permanent - you'll get that higher amount for the rest of your life.
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Victoria Brown
•That's really helpful to hear from someone who's been through it! Did you get any kind of notice from SSA explaining the recalculation when it happened? Or did you just notice the payment amount changed?
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JaylinCharles
I received a letter about a month before I reached FRA explaining that my benefit would be adjusted. The letter showed the months that were being "credited back" and what my new monthly amount would be. However, not everyone gets this notification, so it's good to check your mySocialSecurity account around the time you reach FRA.
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Eloise Kendrick
NOT TRUE! Social Security STOLE my money when I was working at 63 and NEVER gave it back! I called MULTIPLE times when I reached full retirement age and they gave me the runaround. They said I didn't have enough "credits" or something. The whole system is RIGGED against working seniors!!!!!
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Samuel Robinson
•This doesn't sound right. The adjustment for withheld benefits is automatic and built into the Social Security system. There's no requirement for additional "credits" to receive this adjustment. It sounds like there might have been some miscommunication or possibly your situation involved other factors. Did you continue working past your FRA? And did you keep documentation of the benefits that were withheld?
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Eloise Kendrick
Yes I have EVERY pay stub and SS statement since 2010!!! They still wouldn't help. Said something about my benefits were already adjusted for something else so I didn't qualify. Makes NO SENSE but try telling that to the govt!!
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Lucas Schmidt
•I had a similar issue with trying to get through to SSA about my earnings limit adjustment. Kept getting disconnected or waiting for hours. Finally used a service called Claimyr (claimyr.com) and got through to a real person at SSA in about 15 minutes. They explained that my recalculation hadn't been processed correctly because I had also received spousal benefits during the same period. You might want to check out their video to see how it works: https://youtu.be/Z-BRbJw3puU Once I talked to the right person, they were able to sort it out and I got a revised calculation. Sometimes you just need to reach someone who understands these complex situations.
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Freya Collins
I think there's some confusion here about what actually happens. My husband retired at 62 but went back to work part-time and had benefits withheld. When he reached FRA last year, his monthly payment went up, but it wasn't exactly proportional to what was withheld. The way the Social Security rep explained it to us, they don't literally give you back the withheld money dollar-for-dollar. Instead, they adjust your "effective filing date" to account for months when full benefits were withheld. Like if you had 12 months worth of benefits withheld between 62 and FRA, they'd recalculate as if you filed at 63 instead of 62. You get a higher monthly amount for life, but it's based on the benefit reduction factors, not directly tied to the exact dollar amount that was withheld.
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Brianna Muhammad
•This is exactly right. It's important to understand that you're not technically getting back the exact dollars that were withheld. Rather, SSA adjusts your reduction factors as if you claimed later. For context: when you claim before FRA, your benefit is reduced by specific percentages. At 62, you get a 30% reduction from your full FRA benefit (assuming FRA is 67). For each month of benefits withheld due to the earnings test, SSA removes part of that reduction when you reach FRA. So while the end result is beneficial, the math doesn't always match up exactly to the dollar amount withheld.
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LongPeri
My sister went through this last year and said she got a letter from SSA explaining everything. I think as long as you keep track of when your benefits are withheld you should be fine. She said the whole process was automatic.
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Camila Castillo
one thing nobody mentioned is the earnings limit changes every year. for 2025 i think its around $22,300 if ur under FRA. so make sure ur using the right limit when figuring out how much theyll take.
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Victoria Brown
•That's a good point - I should double check the 2025 limit. I'm actually right on the borderline where I might be able to reduce my hours slightly and stay under the limit. Might be worth it to avoid all this confusion!
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Samuel Robinson
One more important detail: in the year you reach FRA, the earnings limit is much higher, and the penalty is reduced to $1 for every $3 over the limit (not $1 for $2). Also, in that year, they only count earnings before the month you reach FRA. So if you turn 67 in July 2030, they would only count your earnings from January through June of 2030, and you'd be subject to the higher limit and reduced penalty rate. This can make a big difference in your planning.
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