Social Security survivor benefits reduction with $40k income at 63 - Medicare impact?
Just seeking some clarity on my sister-in-law's Social Security situation. She started collecting survivor benefits when she turned 60 (about 3 years ago) after my brother passed. She took a break from working from 2023 until now, but she's returning to work next month at a job paying roughly $40,000 annually. With that income PLUS her survivor benefit of approximately $2,300 monthly, I'm trying to understand: 1. How will her earnings affect her survivor benefits in 2026 and 2027? (She'll be 63-64 then) 2. Will her Medicare premiums increase because of the combined income? 3. Is there an earnings limit that applies in her specific situation? She's getting conflicting advice from friends and I want to help her understand what to expect financially. Any insights from those who've been through similar situations would be really helpful!
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Jasmine Hernandez
This is a classic earnings test scenario. Since your sister-in-law will be under her Full Retirement Age (FRA) in 2026-2027, the earnings limit will definitely apply to her survivor benefits. For 2025, the limit is $22,320 (and will likely increase slightly for 2026-27). She'll lose $1 in benefits for every $2 she earns above that limit. With $40,000 income, she'll be about $17,680 over the limit, meaning she could see her annual benefits reduced by around $8,840 (roughly $737/month). As for Medicare, if she's enrolled, her Income-Related Monthly Adjustment Amount (IRMAA) will be based on her modified adjusted gross income from 2 years prior. So her 2026 premium would be based on 2024 income, and 2027 on 2025 income.
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Axel Far
•Thanks so much for breaking that down! So if I'm understanding correctly, her benefits will be reduced by quite a bit. Does that money just disappear, or does she get it back somehow later?
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Luis Johnson
my wife had the same thing happen when she got survivor benefits. they WILL take back ALOT MORE than you think!!!! they didn't tell us about the limit until after she'd been working for 5 months and then they sent a letter saying she owed them $4,600!!!! be careful and have your SIL contact them BEFORE she starts the job
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Ellie Kim
•This is why I always tell people to be proactive about reporting income changes to SSA. It's insane how they handle this. Did your wife have to pay it all back at once or did they at least let her do a payment plan?
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Fiona Sand
Does she need the job? At her age with that benefit amount, she might actually come out ahead by NOT working until she reaches her full retirement age. Once she hits FRA, there's no earnings limit. I did the math when I was in a similar position and decided to just live on my survivor benefits until FRA.
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Axel Far
•That's an interesting perspective I hadn't considered. She really wants to go back to work for social and mental health reasons, but I'll mention this financial angle to her. She might be able to find something part-time that keeps her under the earnings limit.
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Mohammad Khaled
To address your Medicare question specifically - yes, her premiums will likely increase, but not immediately. Medicare uses a 2-year lookback for IRMAA (Income-Related Monthly Adjustment Amount). If her MAGI (Modified Adjusted Gross Income) for 2024 is below $103,000 (for single filers), she'll pay the standard Part B premium in 2026. But if she's earning $40,000 plus $27,600 in SS benefits, her income would be around $67,600, so still within the base premium level. However, there are some important considerations: 1. Only 85% of her SS benefits count toward MAGI for this calculation 2. If she has other income sources (investments, pensions, etc.), those could push her into a higher bracket 3. The thresholds change annually with inflation The most important thing is for her to understand that if her situation changes, she can file Form SSA-44 for a reduction in IRMAA due to life-changing events.
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Axel Far
•Thank you for explaining the Medicare part! That's been confusing me. So it sounds like she'll likely stay in the standard premium range unless she has significant other income sources (which she doesn't). That's reassuring.
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Alina Rosenthal
i went thru this exact thing last year. the ss office kept giving me different answers every time i called. so frustrating!!!
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Finnegan Gunn
•I had the same experience trying to get a straight answer about my benefits! I finally got through to someone helpful after trying for weeks. I discovered Claimyr.com which got me connected to an agent in 20 minutes instead of waiting on hold forever. They have a demo video at https://youtu.be/Z-BRbJw3puU that shows how it works. Totally worth it for saving hours of frustration and actually getting the right information.
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Ellie Kim
Something important that hasn't been mentioned: the benefit reduction from working isn't actually lost forever. When your sister-in-law reaches her Full Retirement Age, SSA will recalculate her benefit amount to credit back those months where benefits were withheld due to excess earnings. So while she'll see reduced monthly payments in 2026-2027, she'll get a bump in her monthly payment when she reaches FRA. It's not a full dollar-for-dollar recovery, but it does help offset some of the reduction. Also, if her current work would result in a higher benefit based on her own work record (rather than the survivor benefit), that higher amount could kick in later. SSA will automatically give her the higher of the two.
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Axel Far
•That's incredibly helpful to know! I had no idea they would credit back some of the reductions later. That makes the decision a bit more complicated but potentially more favorable if she really wants to work.
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Finnegan Gunn
Has your sister-in-law considered how this income will affect her taxes? Survivor benefits are already potentially taxable (up to 85% depending on combined income), and adding $40k of work income will definitely push her into a higher tax bracket. This is something my tax preparer caught that Social Security never explained to me.
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Luis Johnson
•THIS!!! We got KILLED on taxes the first year my wife worked while getting survivor benefits. ended up owing over $3200 at tax time even with withholding from her job!!
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Jasmine Hernandez
One more important point: she should proactively contact SSA to set up withholding from her Social Security benefits once she starts working. This will help avoid a large overpayment that she'd have to repay later. She can estimate her annual earnings and SSA can adjust her monthly payment accordingly. She should also be documenting all communications with SSA (get names, dates, confirmation numbers for any discussions). If she receives conflicting information and acts on incorrect guidance, having documentation can help if there's an overpayment situation later.
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Axel Far
•I'll definitely suggest that she set up the withholding. Better to receive the correct amount from the start than deal with repayments later. She's not great with financial surprises, so planning ahead will be key. Thank you!
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Alina Rosenthal
does anyone know if the 40k includes just her salary or does overtime count too??? my boss wants me to work extra hours but im afraid itll mess up my ss checks
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Mohammad Khaled
•ALL earnings count toward the limit - salary, overtime, bonuses, commissions, even self-employment income. The only things that don't count are investment income, pensions, and other government benefits. So yes, overtime will definitely count toward that $40k total and could further reduce benefits if it pushes her over the earnings limit.
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