Social Security’s Infamous “Earnings Test”

Investment News Contributing Editor Mary Beth Franklin, in a post on, takes an in-depth look at one of the components of Social Security that surprises–and causes some level of heartburn for–folks planning to retire before their full retirement age and remain in the workforce. The heartburn, of course, comes from not being fully aware of the potentially substantial impact on the early retiree’s benefits caused by exceeding the limits set forth in the program.

In her post, Ms. Franklin explains how the so-called “Earnings Test” is applied to benefits, and explains how it temporarily reduces monthly benefits, not only for the primary worker but for those family members drawing benefits on the primary worker’s earnings record as well. And while this reduction in benefits is considered a “penalty” by those affected, Ms. Franklin explains that “any benefits that were forfeited as a result of excess earnings would be restored in the form of higher monthly benefits” once the retiree reaches full retirement age. Check out Ms. Franklin’s post here…

For those unaware of the “earnings test” and its impact on financial planning for early retirees, an unwelcome surprise awaits. So, being informed is a step toward factoring this variable into a solid financial plan. If you have any specific questions on how this applies to your individual situation, feel free to contact the AMAC Foundation’s Social Security Advisory Service for guidance. The Foundation’s service, which is free to the public, can be accessed here…


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