Working while collecting Social Security before FRA - How do earnings over $1950/month reduce benefits?

The earnings test works like this: In 2025, the monthly limit is $1,950 for those under FRA. For every $2 you earn above the annual limit ($23,400), SSA withholds $1 from your benefits. They don't take it dollar-for-dollar. For example, if you earn $30,000 for the year, you're $6,600 over the limit, so they'd withhold $3,300 from your annual benefits. SSA typically takes this by withholding monthly checks rather than asking for money back. The good news is once you reach FRA, you get credit for those months they withheld benefits.

When I started collecting early at 62, I didn't realize how the earnings limit would affect me! I was making about $2,500/month at my part-time job, and suddenly my SS check for $1,450 completely disappeared for several months. SSA sent me a letter beforehand saying they'd withhold benefits for X number of months based on my estimated earnings. Just be prepared for that - it was a shock to my budget when it happened even though I knew about the limit.

One important thing to consider: working while collecting early SS might seem like a bad deal because of the withholding, but it can actually help your benefit amount long-term. If your current earnings are higher than some of the years used in your 35-year calculation, you're increasing your Primary Insurance Amount (PIA). Plus, when you reach FRA, SSA recalculates your benefit to give you credit for months when benefits were withheld. Many people don't realize this advantage.

I had EXACTLY this problem last year. Couldn't get through to SSA for weeks trying to understand how the earnings limit would affect me. I was on hold for hours and kept getting disconnected. Finally found this service called Claimyr (claimyr.com) that got me connected to a SS agent in about 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU. The agent explained that if you're self-employed like me, they count your net earnings, not gross, which made a huge difference. Worth checking out if you need specific answers for your situation.

u need to be careful bout this!! my uncle got hit with a HUGE overpayment notice cuz he didnt tell SSA he was working over the limit. like $9000 he had to pay back!! make sure u report ur earnings changes

Question: Does drawing SS early and having checks reduced for working actually HURT your eventual FRA benefit amount? Or do they just withhold temporarily? My sister says its permanent reduction but that doesnt sound right to me?

I'm going through this right now. For 2025, the annual limit is $23,400 if you're under FRA the whole year. If you'll reach FRA during 2025, the limit is higher for the months before you reach FRA - about $62,160. Also important: only wages count, not investment income, pension, etc. One strategy: if you're just slightly over the limit, consider asking your employer to defer some income to the following year, or if self-employed, timing your invoices/payments to minimize impact. Also, in the first year you claim, SSA applies a monthly test rather than annual if it benefits you, which helps if you stop working mid-year.

i dont get this at all... this is why im waiting till im 70 to collect! too complicated!!!!

Here's what I did: I calculated how much I'd receive from SS for the full year, then figured out how much I could earn before they'd withhold ALL my benefits. Then I made sure my work income stayed under that threshold. For me, the peace of mind was worth earning a bit less. Especially since I knew I'd get more SS once I reached my FRA (which is next year for me, finally!).

To answer your question about advance notice - yes, SSA will send you a letter if they're going to withhold benefits. They typically do this at the beginning of the year based on your estimated earnings. If your actual earnings end up different, they'll adjust the following year. You can update your estimate anytime during the year if your earnings change. Regarding taxes - up to 85% of your SS benefits may be taxable depending on your combined income. This is separate from the earnings test and happens regardless of your age. Many people are surprised by this additional impact of working while receiving SS.

my dad just goes over the limit anyway cuz he says the extra money from working more than makes up for the lost SS $$$. he says do the math for your situation.