I have been working since I started collecting Social Security (SS) when I turned 62. Last year, I was apparently overpaid because of my job. I made $37,000 and now the Social Security Administration (SSA) says I owe it $8,800 because I made too much, and it has withheld my $2,000 monthly SS payment. I am close to the maximum allowable again already this year. So, I am looking at quitting my job so I don’t go over, but the SSA is holding my payments so then I would have no money. Any help would be appreciated. 

Signed: Frustrated by Social Security

Dear Frustrated: You are being affected by Social Security’s “earnings test” which applies to everyone who collects early Social Security and also works before reaching their full retirement age (FRA). If your earned income exceeds the annual limit (which was $19,560 for 2022), Social Security will withhold $1 in benefits for every $2 you are over the limit. If you earned $37,000 in 2022 you were more than $17,000 over the limit and owe half of that back to the SSA. It usually recovers what you owe by withholding your future benefit payments, so the SSA won’t pay you benefits until it has recovered that $8,800, after which your benefits will resume — but only for a while.

If you are working full time and also collecting early Social Security benefits, the earnings test lasts until you reach your FRA, which for you is 66 years and 8 months. The earnings limit goes up a bit each year — for 2023 it is $21,240 — but if you continue to work full time, you’ll receive another overpayment notice and have more benefits withheld. A better approach might be to contact the SSA in advance and tell it what your 2023 earnings are expected to be, thus permitting the agency to suspend your benefits in advance and avoid overpaying you. I’m afraid there is no way around this — collecting early benefits while working full time means the “earnings test” will affect your benefit payments.

 The “good news” in all of this is that when you reach your full retirement age, you will get time-credit for all months your benefits were withheld. By that I mean the SSA will, at your FRA, recalculate your benefit entitlement as though you had claimed later (later by the number of months you had benefits withheld), which will result in a higher monthly payment after your FRA. In that way, you may eventually recover some or all of the benefits withheld by receiving a higher monthly amount for the rest of your life, starting at your full retirement age.

 I suggest you contact Social Security at (800) 772-1213 (or at your local office) and tell the agency you want to provide it with an estimate of your 2023 earnings because you are working and collecting early Social Security benefits. The SSA will work with you to suspend your benefits for an appropriate number of (additional) months to avoid another overpayment situation. Note: you’ll likely need to do this each year you continue to work full time, until the year you reach your FRA when the earnings limit more than doubles. The earnings limit goes away when you reach your FRA.               

Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.