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Starting Social Security Before Your Full Retirement Age and Working - MSN.Com
If you want to start your Social Security Benefits before you reach your full retirement age (FRA) and continue to work, you will be subject to an earnings limit. Social Security allows you to use a special rule in your first year of retirement. It is known as “The First Year Retirement Rule.” It allows you to use a monthly limit versus an annual limit. By using the monthly limit, your earnings before the month you start your benefits aren’t included. The annual limit for 2025 is $23,400 and the monthly limit is $1,950. Social Security goes by when you earn the money, not when it is received. Social Security uses your gross income, before any reductions, on your W-2. If you are self-employed, Social Security uses your net income. It is important to note that Social Security pays a month behind. Example: You start your benefits in June and you won’t receive your June payment until July. Any earnings in June will affect the earnings limit for the month of June.
This rule was created for people who retire mid-year. Any month you earn under the monthly limit of $1,950 in 2025, you are eligible to receive your payments for those months. If 2025 is the year you reach your FRA, the monthly limit is $5,180. Beginning the month you reach your FRA, the earnings limit ends. The key difference between the monthly and annual limits is that exceeding the monthly limit by even $1 will result in Social Security requesting the payment back for that month.
If you go over the earnings limit and have payments withheld, Social Security will recalculate your benefit at your FRA. Example: You had 6 months of payments withheld before you reached your FRA. Social Security will recalculate your benefit at your FRA as if you started it six months later, and it will increase your benefit.
The following year you will only be subject to the annual limit. See the full article by Diego Perez Morales on MSN.com here …
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