Social Security retirement and earnings limit confusion - will I keep any benefits earning $63,000?
I'm planning to start collecting Social Security retirement benefits on January 1, 2025, but I'm confused about the earnings test. My birthday is July 21, 1959, so I know I'm not at my Full Retirement Age (FRA) yet. The SSA website shows my benefit would be $2,007 monthly if I start in 2025. Here's what's confusing me - I earn about $63,000 annually and plan to continue working. Someone at work told me I'd have to pay back $1 for every $1 I earn above some limit. That can't be right, can it? Would I get to keep ANY of my Social Security benefits while working? I thought it was more like $1 for every $2 earned over the limit, but now I'm second-guessing myself. I'm trying to decide if it's even worth applying if I'll lose all my benefits due to my earnings. Can someone explain how this really works?
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GalacticGuru
The person at your work is completely wrong. The earnings test applies if you claim before your FRA (which is 66 and 10 months for someone born in 1959), but it's NEVER $1 for $1! Here's how it actually works for 2025: - If you're under FRA for the whole year: $1 reduction for every $2 you earn above $23,400 - In the year you reach FRA: $1 reduction for every $3 you earn above $62,100 (but only counting earnings before the month you reach FRA) - Month of FRA and beyond: No reduction no matter how much you earn So in your case, if you earn $63,000 in 2025 and you're under FRA the whole year, the calculation would be: ($63,000 - $23,400) ÷ 2 = $19,800 annual reduction That's $1,650 per month reduction from your $2,007 benefit, leaving you with about $357/month.
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Ravi Gupta
•Thank you SO MUCH for clearing this up! I was panicking thinking I'd lose every penny. So I'd still get about $357 monthly while working? That's better than nothing, but still a pretty big reduction. Does the SSA automatically calculate this or do I need to report my expected earnings somehow when I apply?
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Freya Pedersen
my sister went thru this last year. she kept working and gettin benefits but SSA made her pay back a bunch at tax time. huge headache!!!! she ended up owing like $8000 she didnt expect. be careful!!!
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Ravi Gupta
•Oh no, that sounds awful! Did she have to pay it all at once or did they let her make payments? I definitely don't want a surprise tax bill like that.
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Freya Pedersen
•they took it from her refund plus she had to make payments for the rest. she was so mad cause nobody told her this would happen!!!
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Omar Fawaz
I was in almost your EXACT situation last year!!! Applied for SS at 64, was working making around $70k. What a NIGHTMARE trying to figure out what I'd actually get to keep! Here's what ACTUALLY happened - SSA paid me the full amount each month, but then at the end of the year, they calculated how much I exceeded the limit. Then they sent a notice saying I had to repay about $15,000!!! They gave me the option to have future benefits reduced until it was paid back OR make payments. The WORST part is they don't automatically adjust your payments based on your expected earnings. YOU have to tell them and request withholding. Otherwise they just overpay you and demand it back later!!
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Chloe Anderson
•That's exactly what happened to my husband too! It's criminal how they don't explain this clearly. We ended up having his benefits reduced for almost 8 months to pay back the overpayment. Make sure you tell them your expected earnings right from the start!
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Diego Vargas
I've helped several clients navigate this exact situation. Here's what most people don't realize: that earnings test reduction is NOT permanent. Once you reach your Full Retirement Age, SSA will recalculate your benefit and give you credit for the months they reduced or withheld benefits. Your monthly amount will increase at that point. So while it might not make financial sense to claim early if you're still earning $63,000, you're not permanently losing those benefits - they're more like "delayed" until your FRA. Another important point: Only wages and self-employment income count toward the earnings test. Investment income, pension, annuities, etc. don't count.
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Ravi Gupta
•Wait, really? So the benefits aren't completely lost? That changes my thinking quite a bit. So theoretically, I could file at 65, have most benefits withheld due to my earnings, but then at my FRA (66+10mo), they'd adjust my payment upward to account for those withheld benefits? How does that calculation work?
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Diego Vargas
•Exactly! When you reach FRA, SSA recalculates your benefit as if you had filed later for any month you didn't receive a payment due to the earnings test. For example, if they withheld 6 months of benefits, at FRA they'll recalculate as if you filed 6 months later than you actually did. This means your reduction for filing early would be less, resulting in a higher monthly benefit for the rest of your life. It's complicated, which is why many people don't understand this important feature of the earnings test.
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Anastasia Fedorov
i tried calling SSA for 3 days to ask basically this same question and couldnt get thru. kept saying 2 hour wait time then hanging up on me!! seriously how is anyone supposed to get answers???
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StarStrider
•I had the same frustrating experience trying to get through to SSA about my earnings limit questions. After multiple attempts and disconnections, I found this service called Claimyr that got me through to an agent in about 20 minutes instead of waiting for hours or getting disconnected. You can see how it works at https://youtu.be/Z-BRbJw3puU - it basically holds your place in line and calls you when an agent is available. Saved me so much time and frustration when I needed answers about my specific situation with working while collecting benefits. Their website is claimyr.com if you want to check it out.
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Omar Fawaz
One more thing to consider - have you calculated how much you'd get if you just waited until your Full Retirement Age to file? With earnings of $63k, you're probably better off just working and waiting until your FRA to start benefits. By claiming early at 65, your benefit is permanently reduced by about 10% compared to waiting until 66+10mo. Do the math both ways before deciding!!
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Ravi Gupta
•That's a really good point. My $2,007 is already the reduced amount. If I waited until FRA, it would be about $2,230 instead. I need to think about whether getting some benefits now (reduced by both early filing AND the earnings test) makes sense versus just waiting until FRA when there's no earnings test.
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Chloe Anderson
Hi there! Just wanted to say I was in a similar boat last year. One thing nobody mentioned yet - the earnings limit is ANNUAL, but they apply it MONTHLY for payment purposes. So if you have uneven earnings throughout the year (like if you get a big bonus in one month), it can affect which months you get paid and which you don't. Super confusing system!!
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Ravi Gupta
•That's really helpful to know since my income isn't completely even throughout the year. I usually get a bonus in March that's about 10% of my annual income. Sounds like I need to factor that in too.
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GalacticGuru
Since you're planning to apply very soon (January 2025), I'd recommend doing two things right away: 1. Contact SSA now and get an official benefits estimate based on your current earnings record. Make sure all your earnings are correctly recorded. 2. When you apply, be VERY clear about your expected 2025 earnings. Ask them to withhold benefits as needed rather than paying you too much that you'll have to pay back. This is definitely one of the most confusing aspects of Social Security, and unfortunately, a lot of people at SSA don't explain it clearly either.
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Ravi Gupta
•Thank you for the practical advice. I'll definitely include my estimated earnings for 2025 when I apply and ask about withholding. Better to get less up front than have to pay back later. I appreciate everyone's help with understanding this complicated system!
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