Chapter 5: Social Security Annual Earnings Test

Chapter 4: Three Kinds of Social Security Benefits

If you retire, apply for benefits early, and then plan to return to work, it is recommended you think carefully about this before you return to work.

There is an Annual Earnings Test if you receive Social Security before Full Retirement Age that withholds $1 for every $2 you earn over the 2021 maximum of $18,960. Therefore, if you retire at age 62, draw benefits early, then return to work, $1 for every $2 you earn will be withheld. Before you return to work, ask yourself, “Is it worth it?”

If you do plan to work again, you might consider putting off applying for benefits until you retire for good. Once you reach Full Retirement Age, the Annual Earnings Test does not apply, and you can earn as much as you want through employment of any form and Social Security will not reduce your benefits.

If you apply before FRA and work, then:

  • $1 in benefits will be withheld for every $2 you earn over $18,960, in 2021
  • $1 in benefits will be withheld for every $3 you earn over $50,520 in 2021

Working and Receiving Benefits

If you continue to work after filing for benefits, your benefit may increase if your current earnings are higher than your lowest earnings year used to calculate your benefit.

Chapter 6: Paying Taxes on Social Security Benefits