Social Security adjusts earnings test exempt amounts

If you decide to claim your retirement benefits before hitting full retirement age, Social Security will definitely withhold some of the benefits from your own check. The program calls it the “retirement earnings test exempt amounts”, and you should prepare to see a big chunk of your benefits if you are still working.

This is how it will work next year: if you decide to collect Social Security BEFORE reaching full retirement age, then you might earn as much as $1,770 per month, which is $21,240 per year, way before the Social Security Administration starts withholding benefits.

It might happen at the rate of $1 in benefits for every $2 that will be above the limit. This year, the maximum exempt earnings were no less than $1,630 a month, which is $19,560 per year.

But when you reach your full retirement age, the rule will still apply, only until you hit full retirement age. Besides, there will be much more forgiving terms. Next year, you might earn up to $4,710 per month, which is $56,520 per year, before benefits are withheld.

Also, it will be at the rate of $1 in benefits for every $3 that was earned above the limit, instead of just $2. This year, the threshold was $4,330 a month, which is $51,960 per year.