You are taking Social Security early. You’re so excited to retire and then somebody mentions: “Hey, there’s an earnings limit”….what? That’s right, if you are under your full retirement age there is a limit to how much you can earn in a year before your social security benefit starts to get reduced.
What is the Social Security Limit for 2022?
For 2022 the earnings limit is $19,560 bucks. For every $2 you go over that amount, they reduce your social security by $1. So if you make $25,000, you went over the limit by $5,500. Your social security benefit would be reduced by $2,500. That’s fine. You’re still up in the grand scheme of things. But if you’re making $100,000, you went over the limit by $80,440. This would reduce your benefit by $40,220 (half the amount) which, in most cases, would wipe out your entire social security benefit! Not only that, but since you took your Social Security, your benefit will stop growing. What a mistake! We have people contact us all the time who do this. They either thought they had to take Social Security or weren’t aware of the earnings limit.
Earnings Limit With Working Spouse
The social security earnings limit is based on your earnings only, so your spouse can make $200,000/year and it won’t affect your benefit because the earnings limit is not based on our joint income.
Social Security Benefit Was Reduced, Is it Gone Forever?
Say you earned $10,000 more than the limit and your benefit was reduced by $5,000. Is that money just gone? No. You actually get the money back. But you don’t get it back until your full retirement age. Social Security recalculates every year, and they will throw that money back in and recalculate it so that you might make an extra 10-20 bucks a month. Okay, so you don’t get a lump sum check, which is really what you wanted, right? The good news is you will you will get it back.