Social Security Earnings Limit Inquiry

Dear Liz, I’ve fully retired, started receiving Social Security, and picked up some part-time work.

I recently got a letter from Social Security. It stated that I had reached a $22,320 earning limit, which means I need to repay part of my Social Security benefits. I was aware of these limits, so the news wasn’t exactly surprising.

I’m curious about the reasoning behind these earning limits. I mean, if someone qualifies for Social Security, why should their income matter? Are they trying to make people delay applying until they retire completely?

Additionally, I think I remember seeing something about possibly getting repaid for what I had to return. Could you explain that a bit more?

Answer: Social Security functions as an insurance safety net for those who are no longer able to work. The Retirement Income Test was established back in 1935 and has since been part of this system, though its approach has evolved. Initially, the tests could cause individuals to lose all benefits.

Over the years, adjustments have been made to allow people to earn some income without losing everything. For instance, the age at which earnings no longer count against benefits has shifted. It used to be 75 back in the 1950s, then changed to 65 in the 1960s, and now the full retirement age has been set at 67 where earnings tests no longer apply.

Currently, for the year 2025, the test deducts $1 for every $2 earned over a limit of $23,400. Once you hit your full retirement age, any funds withheld will be added back to your benefits.

However, it’s generally more beneficial to delay your application for Social Security, as doing so can increase your future payouts. Many individuals choose to wait until they reach their full retirement age before they start collecting.

For further inquiries, you can submit questions to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or use the contact form at AskLizWeston.com.