Social Security income vs earned income limits - do IRA withdrawals count toward SS earnings test?

Good question! The annual earnings limit only applies to EARNED income - wages from a job or net earnings from self-employment. Your Social Security benefits themselves absolutely do NOT count toward the earnings limit test. And neither do IRA withdrawals, pension payments, investment income, interest, or annuities. The SSA only cares about what you EARN through active work before full retirement age.

My dad got hit with this last year. Only matters if ur working. SS checks dont count as income for the test and neither does IRA money

To clarify a bit more technically - the Social Security earnings test only applies to earned income before you reach your Full Retirement Age (FRA). Specifically: 1. Social Security benefits themselves are NOT counted as earnings 2. IRA distributions are NOT counted as earnings 3. Pension payments are NOT counted as earnings 4. Investment income is NOT counted as earnings Only wages or self-employment income count. For 2025, the annual limit is approximately $22,320 if you're under FRA for the entire year. If you exceed this limit, SSA will withhold $1 in benefits for every $2 you earn above the limit. Keep careful track of your earned income if you're close to the limit, as unexpected overtime or bonuses could push you over.

my sister thought the same thing!!! got herself all worked up for nothing. its ONLY work money that counts, not your ss checks or retirement accts

The earnings test can be so frustrating! When I was trying to get answers about this, I kept getting disconnected when calling SSA. I eventually used Claimyr (claimyr.com) to connect with an agent without the endless waiting. They have a video showing how it works at https://youtu.be/Z-BRbJw3puU. Got confirmation that only earned income counts toward the annual limit - definitely not your SS benefits or IRA withdrawals. Made it so much easier to plan my part-time work hours knowing exactly what counts.

BE CAREFUL THOUGH!!! Even though IRA withdrawals don't count for the earnings test, they DO count as income for tax purposes on your Social Security benefits!! Up to 85% of your SS can be taxable if your combined income is too high. I learned this the hard way last year and got killed on taxes. They use this weird "combined income" formula: your AGI + nontaxable interest + 1/2 of your Social Security benefits. If that's over $34,000 (single) or $44,000 (married), up to 85% of benefits are taxable!

To summarize the key points for everyone: 1. The earnings test only counts EARNED income (wages, self-employment) 2. Social Security benefits do NOT count toward the earnings test 3. IRA withdrawals do NOT count toward the earnings test 4. HOWEVER, IRA withdrawals DO affect the taxation of your Social Security benefits The earnings test and tax rules are completely separate issues. The earnings test determines if SSA withholds some benefits due to work, while tax rules determine how much of your SS benefits are subject to income tax.

My accountant told me that you only have to worry about the limit until you hit your full retirement age. Once you reach that, there IS NO LIMIT on how much you can earn! I turn 67 next year and can't wait to work as much as I want without SS taking anything back!

Just want to add one more thing that might help - if you're worried about tracking your earned income throughout the year, SSA actually has a great online tool called "my Social Security" where you can report your estimated earnings. This helps them adjust your monthly payments if needed instead of waiting until the end of the year for a big surprise. I learned this after going over the limit one year and having to pay back a chunk of benefits all at once. Much easier to stay on top of it monthly!

This is such a common source of confusion! I went through the same panic when I first started collecting early benefits while still working. What really helped me was understanding that there are basically three separate "buckets" to think about: 1. **Earnings Test**: Only wages/self-employment income count. SS benefits and IRA withdrawals are ignored completely. 2. **Income Taxes**: IRA withdrawals + other income can make more of your SS benefits taxable (but this is totally separate from the earnings test). 3. **Medicare Premiums**: If your income gets really high, you might pay higher Medicare premiums (IRMAA), and IRA withdrawals DO count for this. The key is that these are three completely different calculations! Your financial planner was probably thinking about the tax implications while your brother-in-law was focused on the earnings test. Both can be "right" about their specific piece but wrong about the others. I'd suggest getting clarity from your financial planner about which specific issue they were addressing.

Just wanted to share my experience since I went through something similar last year. I was 64, taking early SS benefits, and working part-time at a retail job. I was SO worried about the earnings limit that I actually turned down extra shifts during the holidays! Turns out I was being way too conservative - I could have earned up to that $22,320 limit from my JOB without any issues. My SS payments themselves don't count at all toward that limit. Also took some money from my 401k for home repairs and that didn't affect the earnings test either. The key thing I learned is to keep really good records of your work income throughout the year so you know exactly where you stand. Don't leave money on the table like I did by being overly cautious!