The amount you can earn before your paychecks become a problem will depend if you’re going to hit FRA at some time during the year or not. That’s because different income thresholds apply before you begin to lose benefits, and you lose benefits at a higher rate if you’re younger.
This is how the rules work:
- If you’ll hit FRA at some point during the year, you can earn up to $50,520 in 2021 or $51,960 in 2022 and won’t lose any benefits. You’ll lose $1 in benefits for each $3 extra you earn.
- If you won’t hit FRA during the year, you can earn up to $18,960 in 2021 and $19,560 in 2022 before you begin losing benefits. You lose $1 in benefits for each extra $2 earned.
The Social Security Administration actually withholds entire checks when you forfeit benefits, so you don’t just lose a little from each month’s payment. If you end up forfeiting $3,000 in Social Security due to excess earnings and your checks are $1,500 per month, you’d miss out on two entire months of benefits.
Now, when you reach FRA, the Social Security Administration looks at how many checks you missed and credits you back the early filing penalties that would’ve applied in those months. As a result, your monthly checks go up at FRA. But since you may not get your benefits back for a while, you still need to be aware that working could have a big impact on the income Social Security can provide you.
