Dear Liz: I am under full retirement age, collecting Social Security and working part-time. <\/p>\n
I just received a letter from Social Security telling me I earned over the $22,320 limit and now have to pay back some of my Social Security. I was aware of the limit, so the letter was not unexpected. <\/p>\n
What I\u2019m curious about though is what is the rationale behind the earnings limit? Once you\u2019re eligible for Social Security, why do they care how much you earn? Are they trying to discourage applying before full retirement age? <\/p>\n
Also, and more importantly, I think I read that somewhere down the line, I will get back what I had to pay back. Can you clarify that for me?<\/p>\n
Answer: Social Security was designed as insurance for those who could no longer work, and a retirement earnings test has been a part of the system from its creation in 1935. Back then, the test was all-or-nothing: Any earned income would preclude your getting a benefit.<\/p>\n
Over time, the test was modified so that people could earn some income without losing all their benefits. The age at which the earnings test no longer applies has changed as well. In the 1950s, it was set at 75. In the 1960s, the age was lowered to 65. In the 1980s, it was adjusted so that the current \u201cfull retirement age,\u201d when the test no longer applies, is 67.<\/p>\n
The current test withholds $1 for every $2 earned over a certain limit, which in 2025 is $23,400. Once you reach full retirement age, the withheld amounts will be added back into your benefit.<\/p>\n
What you won\u2019t get back, however, is the larger benefit you could have earned by delaying your initial application. Most people are better off waiting at least until full retirement age to collect Social Security, if they possibly can.<\/p>\n
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet.<\/a> <\/a>Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the \u201cContact\u201d form at asklizweston.com.<\/a><\/p>\n If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement<\/a> and agree that your clicks, interactions, and personal information may be collected, recorded, and\/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Dear Liz: I am under full retirement age, collecting Social Security and working part-time. I just received a…\n","protected":false},"author":2,"featured_media":7267,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-7266","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/7266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=7266"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/7266\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/7267"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=7266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=7266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=7266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}