Social Security Matters

Ask Rusty – About Working While Collecting Early Benefits

Dear Rusty: How much would be withheld from my social security benefits? I am 62 and can claim about $1,900 a month now. I’m still working, making about $75K per year. How much of my benefits would I get? What would be withheld from me and when would I get it back? And would there be any penalty? Signed: Eligible but Working

Dear Eligible: In the scenario you describe, you will not be eligible to collect Social Security retirement benefits at this time because your earnings are too high. Here’s how that is determined:

• At age 62, you are subject to Social Security’s “earnings test” which limits how much you can earn while collecting early benefits. The earnings limit applies until you reach your full retirement age (FRA), which for you is 67.

• Your penalty for exceeding the earnings limit now would be $1 for every $2 you are over the limit. At your current salary of $75K per year, you will be over the 2022 annual earnings limit of $19,560 by $55,440, which means you would owe Social Security $27,720. Since your age 62 benefit amount is about $1900 per month ($22,800/year), your annual SS benefit would be insufficient to offset the penalty for exceeding the earnings limit, thus you would not be entitled to a Social Security benefit because of your current earnings. You will again be eligible to collect SS when your earnings are substantially less, or when you reach your full retirement age, whichever occurs first.

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