Taking Social Security 2 months before FRA while still working - will earnings limit penalty apply?
I'm getting ready to claim my retirement benefits but I'm a bit confused about the timing. My full retirement age (FRA) is April 2025, but I'd like to start collecting in February 2025 (just 2 months early). The thing is, I'll still be working full-time through April, and my salary would definitely hit the earnings limit by February's end. Would I get penalized for those 2 months since I'm not technically at my FRA yet? I'm trying to figure out if I should just wait until April or if I can start a little early without getting hit with a reduction. Does anyone know how the monthly earnings test works in this specific situation?
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Amina Sow
Yes, you would be subject to the earnings test since you're claiming before your FRA. For 2025, if you earn over about $25,000 (the exact 2025 limit hasn't been announced yet), SSA will withhold $1 for every $2 you earn above that limit. BUT - and this is important - in the year you reach FRA, SSA only counts earnings BEFORE the month you reach FRA, and the withholding is more generous ($1 for every $3 above a much higher limit, probably around $68,000 for 2025). Since you only have 2 months before FRA, this might not impact you too badly.
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Paolo Conti
•Thanks for the info! So if I understand correctly, they'd only look at my January and February earnings for the penalty calculation? I'll definitely earn over $25,000 for the whole year, but not in just those two months. Does that mean I might avoid the penalty entirely?
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GalaxyGazer
I went thru this last year! They look at your monthly earnings for those 2 months, not the whole year. If your making under the monthly amount its fine. I think its like $2,000 something per month? They explained it to me on the phone but I forget the exact #
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Oliver Wagner
•Just to clarify - the annual earnings limit for 2024 is $22,320 (2025 limit will be higher), which breaks down to $1,860 per month. If you're going to earn more than the monthly amount in those two months before FRA, you would face a reduction. However, SSA applies a monthly test ONLY in the first year of retirement. So if you earn above the monthly amount in Jan/Feb, you might not receive benefits for those months, but once you reach FRA in April, you'll get full benefits regardless of earnings from that point forward.
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Natasha Kuznetsova
DO NOT listen to those saying its a 'penalty'!!!! Its actually a WITHHOLDING not a penalty!!!! The SSA will recalculate your benefit amount when you reach full retirement age and give you credit for any months they withheld benefits. So you'll get that money back eventually in the form of a higher monthly benefit. I had to fight with them for MONTHS to get this straightened out on my record!!!!
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Paolo Conti
•Oh that's interesting! So even if they withhold some money those first two months, it's not lost forever? That makes me feel better about applying early.
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Javier Mendoza
whoa confusing! I just took mine 3 months early and had no idea about any of this. Lucky I had already retired I guess?
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Amina Sow
•Yes, if you weren't working when you claimed, the earnings test wouldn't apply to you. It only affects people who are working and collecting benefits before reaching their full retirement age.
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Emma Thompson
I've been trying to reach the SSA to ask this exact question for 3 weeks!!! They keep disconnecting me or putting me on hold for hours. I finally found a service called Claimyr (claimyr.com) that got me through to an agent in about 20 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU - totally worth it to get a definitive answer on your specific situation since everyone's case is different. The agent explained the monthly earnings test to me in detail.
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Paolo Conti
•I've never heard of this service before. Did you actually get clear answers from the SSA agent? I've been trying to call for days with no luck.
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Emma Thompson
•Yes! The agent was really helpful and pulled up my actual record. She explained exactly how the earnings test would apply in my case (similar to yours but my FRA is March). The monthly test means they only look at earnings in the specific months before FRA, not your annual income.
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Malik Davis
my sister started collecting 3 months b4 her FRA date and still worked. they took away 2 of her payments completely but when she hit FRA they stopped caring about her work income. good luck!
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Paolo Conti
•Thanks for sharing that experience! Sounds like I might lose the February and March payments but then be fine from April onward. That helps with my planning.
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Oliver Wagner
To give you the most precise answer: In the year you reach FRA, the earnings test changes in the month you reach FRA. For January through March 2025, you'll be subject to the standard test (approximately $2,000/month or $25,000/year in 2025), with $1 withheld for every $2 above the limit. However, this uses a MONTHLY test in your first year claiming benefits. So if your monthly income exceeds the limit in February and March, you might not receive benefits for those months. But starting in April (your FRA month), you'll receive your full benefit regardless of earnings. And as someone else mentioned, any benefits withheld aren't permanently lost - SSA recalculates your benefit when you reach FRA to account for months benefits were withheld.
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Paolo Conti
•This is SO helpful, thank you! I think I understand now. Since I'll definitely earn more than the monthly limit in Feb and March, I'll probably have those benefits withheld. But it sounds like waiting until April would be the simplest approach if I want to avoid the withholding completely.
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GalaxyGazer
Just curious why not just wait the extra 2 months til April? Seems like it would be easier than dealing with all this withholding stuff.
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Paolo Conti
•You know, after hearing all this, I'm leaning toward just waiting until April. I was hoping to start benefits a little earlier, but the complexity doesn't seem worth it for just two months. Thanks for the perspective!
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