If you claim Social Security before Full Retirement Age (FRA) and keep working, you may see some checks withheld. That can feel alarming. However, those withheld benefits aren’t gone. Social Security gives them back by raising your monthly benefit once you hit FRA. In this guide, I’ll explain the 2025 earnings limits, how withholding actually works, and why the “give-back” at FRA matters.
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The Big Picture
Claiming early gives you income now. Working gives you flexibility and purpose. The earnings test coordinates both. It limits how much you can earn before Social Security withholds part of your benefit. After FRA, that limit disappears. And importantly, withheld benefits are credited back through a higher monthly check going forward.
The 2025 Earnings Limits at a Glance
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If you’re under FRA all year (2025): You can earn up to $23,400. Above that, Social Security withholds $1 for every $2 over the limit.
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If you reach FRA in 2025: For the months before your FRA month, you can earn up to $5,180 per month. Above that, Social Security withholds $1 for every $3.
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Once you reach FRA: The earnings limit no longer applies. Earn any amount without a benefit reduction.
These rules apply only to people who start benefits before FRA. If you claim at or after FRA, there’s no earnings test.
The Special Monthly Rule (First-Year Rule)
Your first year is unique. If you retire mid-year or start benefits mid-year, Social Security may apply a monthly test instead of the annual limit. This rule can help if you had high earnings earlier in the year but stop working after you claim.
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Under FRA all year: For 2025, Social Security may treat months with earnings at or below a monthly amount as “retired.”
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In the year you reach FRA: For months before FRA in 2025, the program may use a $5,180 per month test.
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Why it helps: You may still receive benefits for months you work little or not at all, even if your year-to-date earnings are high.
The monthly rule often applies only in the first calendar year you claim. After that, the annual limit typically governs.
What Counts as “Earnings” (and What Doesn’t)
The earnings test looks at work income, not investment income.
Counts toward the limit:
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W-2 wages paid in the year.
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Net self-employment income for the year.
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Bonuses, commissions, and vacation payouts when paid.
Doesn’t count toward the limit:
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Pension or annuity income.
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Social Security benefits themselves.
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Interest, dividends, and capital gains.
Timing matters. A bonus paid in 2025 counts in 2025, even if you earned it the prior year.
How Withholding Actually Works
This part trips people up. Social Security doesn’t shave a few dollars off each check. Instead, it typically withholds whole checks until it recovers the required amount.
Step-by-step:
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Estimate how much your 2025 earnings will exceed the limit.
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Apply the reduction formula: $1-for-$2 or $1-for-$3, depending on your situation.
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Social Security withholds the number of full checks needed to cover that total.
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Once the total reduction is met, your checks resume.
If your estimates change, Social Security reconciles later. You may receive back payments or see extra withholding.
Why Withheld Benefits Aren’t Lost
This is the part many people never hear. At FRA, Social Security recalculates your benefit. It removes the reduction months that were fully withheld and increases your ongoing monthly benefit. You don’t get a lump sum at FRA. Instead, you get a higher check for life because the program treats you as if you had started later.
Think of it as a give-back through a higher monthly payment, not a refund check.
Two Clear Examples (Using 2025 Numbers)
Example 1: Under FRA All Year
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Birthdate: June 1962
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FRA: 67
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Claim start: January 2025 at age 63½
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2025 earnings: $33,400 from a part-time job
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2025 limit: $23,400
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Excess earnings: $10,000
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Reduction: $1 for every $2 over the limit → $5,000 total
What happens: Social Security withholds enough full monthly checks to cover $5,000. Checks resume after the withheld amount is met. At 67, the program credits back those withheld months and increases the monthly benefit going forward.
Example 2: You Reach FRA in 2025
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Birthdate: August 1959
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FRA month: August 2025
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Claim start: January 2025
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Earnings Jan–Jul 2025: $72,000
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Monthly limit (before FRA month): $5,180
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Excess before FRA: You exceed the monthly limit each month before August.
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Reduction: $1 for every $3 over the limit, applied to pre-FRA months only.
What happens: Social Security calculates the total reduction based on your over-limit amounts before FRA. It withholds the number of checks needed to reach that total. Starting in August, the limit disappears, and you receive full checks. At FRA, withheld months are credited back via a higher ongoing benefit.
Planning Moves If You’re Working and Collecting
You have levers. Use them to avoid surprises and optimize your outcome.
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Know your 2025 limit: Under-FRA annual limit is $23,400. In the year you reach FRA, watch the $5,180 monthly limit for months before FRA.
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Time your wages and bonuses: If possible, shift work or bonuses to months after FRA. That avoids pre-FRA reductions.
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Use the special monthly rule wisely: In your first year of benefits, the monthly test may preserve some checks.
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Delay your claim if you expect high earnings: If you will earn well above the limit, consider waiting. You avoid withholding and lock in a higher base later.
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Update estimates with Social Security: If your earnings change, tell SSA. It can adjust withholding and reduce year-end surprises.
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Keep records: Track pay stubs, self-employment income, and timing of payouts.
Coordination With Taxes and Medicare
The earnings test and tax rules are separate. Your benefits can be taxable based on “provisional income.” That formula includes half your Social Security plus other income like wages, interest, and IRA distributions. Up to 85% of benefits may be taxable for higher incomes.
Also consider Medicare IRMAA. Higher income can raise Medicare Part B and Part D premiums two years later. If you’re near a threshold, model the impact before you trigger large income events.
The upshot: plan your earnings, draws, and Roth conversions together. You can reduce tax drag and avoid IRMAA surprises.
Frequently Asked Questions
Do my spouse’s earnings affect my test?
No. The earnings test applies to the worker who is receiving benefits. However, household income still affects taxes and Medicare premiums.
Will I get a lump sum at FRA for withheld checks?
No. You won’t receive a lump sum. Social Security recomputes your benefit at FRA and raises your monthly check going forward.
Do pensions and investments count toward the earnings limit?
No. The test looks at work earnings. Pensions, IRAs, 401(k)s, and investments don’t count for the limit. They do count toward benefit taxation and may influence Medicare premiums.
I’m self-employed. How does this work for me?
Social Security looks at net self-employment income for the year and whether you rendered substantial services. Talk with your tax pro to model the effect.
What if I only work part of the year?
The special monthly rule can help in the first year you claim. Social Security may treat months with earnings under the monthly limit as “retired,” even if your yearly earnings are high.
Can I start benefits and pause later?
Yes. You can suspend benefits at FRA or later to earn delayed retirement credits until age 70. That lifts your benefit while removing the earnings test.
A Simple Checklist
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Estimate your 2025 earnings.
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Identify which limit applies to you.
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Consider the monthly rule in your first year.
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Decide whether to claim now or wait.
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If you claim, tell Social Security your expected earnings.
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Revisit your plan as your income changes.
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At FRA, confirm your numbers.
Practical Scenarios
“I want to claim now but work a little.”
Great, but run the math! If your 2025 earnings stay under $23,400, there’s no withholding. If you go over, know how many checks might be withheld. Decide if that trade-off works for you.
“I’ll reach FRA late this year.”
Target your heavy earnings after the FRA month if you can. Before FRA, the $5,180 monthly limit applies. After FRA, there’s no limit at all.
“My bonus hits in March.”
Ask if your employer can pay it after your FRA month. If not, plan for withholding and the subsequent recalculation. You’re not losing benefits; you’re shifting when you receive them.
Why the Earnings Test Isn’t the Villain
The earnings test can look like a penalty. But it isn’t. It’s just a timing mechanism. It withholds money now if you earn over the limit and then gives it back by raising your monthly benefit at FRA. That structure encourages continued work while keeping the system fair for early claimers and later claimers.
I treat the earnings test as one planning lever among many. It sits alongside your cash-flow needs, tax brackets, Medicare, spouse benefits, and long-term goals. When you coordinate the pieces, you control the outcome.
Final Thoughts and Next Steps
Working while collecting Social Security can be smart. It adds income, preserves savings, and keeps your options open. Yes, the earnings test may withhold checks if you earn above the limit. But those withheld benefits aren’t lost. They return as a higher monthly check at FRA.
Run your numbers. Choose a claiming date that fits your life and income. If your situation is complex, get help. A fee-only fiduciary can coordinate earnings, Social Security timing, taxes, and Medicare. A little planning now can save stress—and money—later.
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