Will Social Security penalize me for earnings before claiming at 64 if I've already exceeded the annual limit?
I'm turning 64 this summer and planning to retire in August 2025. I've been looking into starting my Social Security benefits in September, but I'm confused about the earnings test. Since I'll be working the first 8 months of the year, I'll definitely earn more than the $23,500 annual limit for people under FRA. If I stop working completely before I file for benefits, will they still penalize me for money I earned in the first part of the year? Or does the penalty only apply to earnings after I start collecting? I don't want to lose benefits just because of my January-August income if I can avoid it. Has anyone dealt with this situation?
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Sophia Russo
doesnt matter when u earn it, its all the same to them. my brother got hit with this last yr when he retired in october. SSA counted ALL his income for the yr even tho he wasnt getting SS for most of it. stupid system!!!!!
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Mason Kaczka
•Ugh, that's what I was afraid of. Did they reduce his benefits a lot? And did they take it all at once or spread it out?
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Evelyn Xu
The earnings test is applied to your ANNUAL earnings, regardless of when during the year you earned the money. If you earn above the limit ($23,500 for 2025 if you're under FRA the whole year), they'll withhold $1 in benefits for every $2 you earn above that threshold. So yes, if you've already earned over the limit before you claim, they'll still reduce your benefits. However, once you reach your Full Retirement Age, Social Security will recalculate your benefit amount to account for months when benefits were withheld.
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Mason Kaczka
•Thanks for explaining. So there's no way around it? I was hoping if I didn't earn anything AFTER I started collecting, they might ignore the earlier income.
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Evelyn Xu
•No, unfortunately that's not how it works. SSA considers your TOTAL annual earnings. But keep in mind that when you reach your FRA, they'll recalculate your benefit and increase it to account for the months when benefits were withheld. So you'll eventually get that money back in the form of a higher monthly benefit from FRA onward.
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Dominic Green
This happened to my wife. Called SSA like 5 times and got different answers each time! First person said only earnings after claiming count, next person said its all earnings for the year. Total mess trying to get straight answers!
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Hannah Flores
•I ran into the same communication issues with SSA - couldn't get through on the phone for days, then kept getting inconsistent information. I discovered a service called Claimyr that got me connected to a real agent in under 20 minutes instead of waiting on hold for hours. You can see how it works at https://youtu.be/Z-BRbJw3puU. The agent I talked to confirmed that it's definitely ALL income for the calendar year that counts toward the earnings limit, regardless of when you start benefits. At least I finally got a definitive answer!
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Kayla Jacobson
Have u considered just waiting until January 2026 to file? That way ur 2025 earnings wont matter at all and you'll get a slightly higher monthly amount anyway from the delayed credits. Might be worth running the numbers.
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Mason Kaczka
•That's a good point! I haven't thought about that. I'd miss out on 4 months of payments in 2025, but maybe the higher amount plus avoiding the penalty would make up for it in the long run. I'll have to do some calculations.
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William Rivera
There's a special rule for the first year of retirement that might help in your situation. If you have a month where you stop substantial work AND earn under the monthly limit (about $1,958 for 2025), that month counts as a non-service month regardless of your annual earnings. This means you could potentially receive full benefits for September-December if you truly retire in August. See this page on SSA's website about the "first year rule": https://www.ssa.gov/benefits/retirement/planner/rule.html I'd recommend documenting your last day of work and making sure you have no earnings at all after August if you want to use this provision.
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Grace Lee
•This is exactly right. The first year retirement rule is a lifesaver in these situations. My husband retired mid-year 2024 and we were able to use this exception. His annual income was well over the limit, but because he completely stopped working in July and had $0 earnings for August-December, SSA treated those as full benefit months with no reduction. Make absolutely sure you have ZERO earnings after your retirement date though - even a small consulting fee or vacation payout can disqualify a month.
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Sophia Russo
my cousin tried to do something like this and social security took back money later saying he owed them!!! be really careful with all this!!
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Evelyn Xu
One last thing to consider - have you calculated whether taking benefits before your FRA makes financial sense? You'll be getting a permanently reduced benefit amount by claiming early. If you have sufficient savings, it might be better to wait until FRA to avoid both the earnings test issues and the permanent reduction.
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Mason Kaczka
•That's a good point. My FRA is 67, so I'd be claiming 3 years early. I've been debating this for a while. My health isn't great (heart issues), so I'm leaning toward taking it earlier rather than waiting. Family history isn't promising for longevity either. But I do have decent savings, so I could wait if the math really favored it.
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Grace Lee
•With health concerns, taking it earlier often makes sense. My financial advisor showed me that the break-even point is typically around age 80-82. If you don't expect to reach that age due to health issues, claiming earlier is usually the better financial choice. Just make sure you understand that at 64, you'll get approximately 20% less than your full benefit amount permanently.
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