Started get early SS benefits at 62.5 and my 15 year old daughters benefits, in April 2018. I am reaching the work threshold of $17040.00 for this year. What to keep working but i'm confused when the overage will be taken out or withheld.( $1 for every $2 over) And will I receive that money at full retirement age? Confusing stuff.

Thanks

Denny

Hi Denny,

If you earn more than $17,040 in 2018, Social Security will withhold the necessary amount as soon as they find out about it. The amount they'd need to withhold is $1 of the benefits payable on your record for each $2 that you earn in excess of $17,040 this year.

If you give Social Security an earnings estimate higher than $17,040, they'll withhold the tentative amount needed as soon as possible. That's the best plan in my mind because it's better to have benefits withheld while you have your earnings coming in, as opposed to having them withheld later when you may be more dependent on your Social Security income. However, if you don't report your earnings Social Security will find out about them next year when they receive a copy of your W-2 form(s) and information from the IRS regarding any self-employment earnings you may have. And, if you end up earning more than $17,040 and more than what you previously told Social Security that you planned to earn, you'll be overpaid and Social Security will propose stopping your benefits until the overpayment is recovered. On the other hand if your earnings end up being lower than what you estimated, Social Security will refund any excess withholding to you.

Furthermore, knowingly withholding pertinent information about your earnings is considered fraudulent, which could result in a fine or imprisonment. Frankly, though, Social Security rarely pursues charges against people who underestimate their earnings unless it's extremely egregious.

Benefits lost to the earnings test are not repaid, but could eventually be recouped over time as the result of a benefit rate increase. If you don't receive some of your monthly benefits between your month of entitlement and your full retirement age (FRA) because of the earnings test, Social Security will recalculate your benefit rate to remove the percentage reduction that was previously applied to your benefit rate for those months after you reach FRA.

For example, say Jim files for his retirement benefits at age 62.5. Jim's full retirement age rate (PIA) is $1700, but his benefit rate is reduced for age to $1310. Due to Jim's earnings, 10 months of his benefits end up being withheld by the time he reaches FRA. As a result, Jim's benefit rate would be recalculated to remove the percentage reduction for those 10 months, raising his benefit rate at FRA from $1310 to $1388. Therefore, that $78 increase could then allow Jim to recoup some, all or more than all of the benefit money lost to the earnings test over the remainder of his life.

Best, Jerry