Personal Finance

I'm planning to claim Social Security next year but the government says my income will force them to withhold more of the benefits - is that correct?

Maurie Backman

Published: January 9, 2025 7:23 am

Key Points from 24/7 Wall St.

• Exceeding Social Security’s earnings-test limit can result in withheld benefits.
• Once you reach full retirement age, the earnings-test limit no longer applies.
• You can try to appeal a decision made by the Social Security Administration, but in some cases, waiting might be a better bet.
• Smart Social Security planning can help you retire early. Talk to a professional today and learn more ^(Sponsor)

Social Security is a fairly flexible program in that it allows you to decide when you want to start taking benefits provided you’re at least 62 years of age. The longer you wait (up until age 70), the larger a monthly benefit you can lock in, but you’re also allowed to file sooner if you don’t want to wait on your money.

Social Security also allows people to work and earn money from a job while receiving benefits. But there are rules to follow in that regard. And sometimes, those rules might end up biting you.

That’s what seems to be happening to one reader who wrote in with a question. They’ll be reaching full retirement age (FRA) in March of 2025 and filed for Social Security in October of 2024. Because they’re still working, they were told their income was too high in 2024 to get any benefits. But they’re also being told they can’t get benefits this year despite now earning less, and despite reaching FRA in a few months.

What the Social Security Administration (SSA) is doing is basically preemptively withholding payments for the wrong reason. And understandably, the reader wants to know what they can do.

How the Social Security earnings test works

When you claim Social Security prior to FRA and make money from a job, you’re subject to an earnings-test limit. Exceeding that limit results in withheld benefits that are paid back to you once FRA arrives.

The earnings-test limit changes each year. In 2025, it’s $23,400, after which $1 in benefits is withheld per $2 of earnings. But for people reaching FRA in 2025, the earnings-test limit is $62,160. And from there, $1 in Social Security is withheld per $3 of earnings.

It’s possible to earn enough income to completely wipe out your Social Security benefit payments under the earnings-test rules — especially if you’re working while collecting benefits way ahead of FRA. So that situation isn’t so unusual. The problem the reader above is having is that the SSA may be incorrectly estimating their 2025 income and withholding benefits erroneously.

Also, it’s one thing for the SSA to withhold benefits through March. But once the reader’s FRA arrives, there should be no reason to withhold benefits at all.

What to do when the SSA makes a mistake

When the SSA makes a decision you don’t agree with, you have the right to request a reconsideration. You can find the form online and then mail it in to the Social Security office closest to your home. You can also visit your local Social Security office or call 1-800-772-1213 for additional help.

This is a step the reader above should definitely take — especially since they’ll be reaching FRA in March, at which point their income shouldn’t impact their benefit payments one bit.

The good news is that the reader should be entitled to their previously withheld benefits once they reach FRA. So once the SSA starts paying them, their checks should be larger. But this is one situation where action needs to be taken to get the SSA to realize their error.

Sometimes, what happens in a situation like this is that even if no action is taken, the SSA eventually realizes its mistake and starts issuing payments. But there seems to be some misinformation at play here, so it’s in the reader’s best interest to be proactive to avoid having to wait longer than necessary to get their money.