Social Security retirement earnings limits confusion - monthly vs. annual limits after early retirement

You're on the right track! When you retire before your FRA, Social Security applies two different earnings tests depending on the year: 1. In your first year of retirement (2024), they use the monthly earnings test - you can get benefits for any month you earn below $1,950 regardless of your annual total. 2. Beginning January 2025, they'll switch to the annual earnings test - you can earn up to $23,400 for the entire year without penalty, and it doesn't matter how that's distributed across months. So yes, in 2025 you could earn $5,000 in one month and $0 in other months, as long as your total for the year stays under $23,400. You'll be subject to this annual test until you reach your FRA of 67.

watch out my brother got hit with a HUGE overpayment notice cuz he thought the same thing. he went over by like $2k for the year and they made him pay back like 6 months of benefits!! the ssa doesnt play around with this stuff

This is correct - the monthly earnings test only applies during your first year of retirement. The monthly test is primarily designed for people who retire mid-year, so they don't get penalized for earnings before retirement. For 2025, you'll be subject to the annual earnings limit of $23,400 (assuming no COLA increase changes this amount). If you exceed that annual limit, SSA will withhold $1 in benefits for every $2 you earn above the limit. Keep in mind you should report any changes in your expected earnings to SSA to avoid potential overpayments. Once you reach your full retirement age (67), the earnings test no longer applies and you can earn unlimited amounts without affecting your benefits.

Great question about income types. The earnings test ONLY counts earned income - wages from a job or net earnings from self-employment. It does NOT count: - Investment income (dividends, interest, capital gains) - Pension payments - Rental income (unless you're in the business of real estate) - Annuities - Other government benefits So your stock dividends, 401(k) distributions, and rental property income won't count toward the $23,400 limit.

I went thru the EXACT same thing when I retired at 63 last year!!! The whole monthly vs annual thing is so confusing, I almost gave up and waited until my FRA. But yes, you're good to just focus on the annual amount after your first year. Just make sure you report your expected earnings to SSA at the beginning of the year so they can adjust your benefits proactively if needed. Otherwise, you might get a nasty surprise later!

You're supposed to call them, but GOOD LUCK getting through! I spent 3 days trying, just kept getting disconnected or wait times of 2+ hours. I finally used this service called Claimyr that got me connected to an agent in like 20 minutes. Their website is claimyr.com and they have a video showing how it works: https://youtu.be/Z-BRbJw3puU. Saved me a ton of frustration. The agent helped me estimate my earnings for the year and made notes in my file.

WATCH OUT!!!!! The SSA WILL audit you if you go over the limit and demand ALL your benefits back!!!! I had a friend who went over by just $700 and they wanted SIX MONTHS of payments back!!!!! Over $10,000!!!! The system is RIGGED to trip you up! Make sure you track EVERY DOLLAR you earn!!!!

my dad just went through this whole thing. he retired last year at 64 and was super confused too. fyi they told him the annual limit might go up a little in 2025 because of COLA increases, so you might have a bit more room.

Wait im confused does FRA stand for first retirement age? I thought it was 62? Why are you saying its 67? My mom just turned 62 and she's trying to figure out when to take SS.

btw dont forget that even though you're tracking the earnings limit, the SSA still takes taxes out based on your combined income. i forgot about that and had a surprise tax bill lol