Editor’s Note: After a long career in the data processing industry, Russell Gloor joined the Association of Mature American Citizens in 2013. Gloor received training from the National Social Security Association and was accredited by the NSSA® as a Social Security adviser in 2016. Currently part of the AMAC Foundation’s Social Security Advisory team, he annually counsels thousands of American seniors about their Social Security options. In addition to answering Social Security questions daily, he also authors the AMAC Foundation’s nationally syndicated weekly “Ask Rusty” advice column and has written three instructional books about Social Security.

Dear Rusty: I have been working since I started collecting Social Security when I turned 62. Last year I was apparently overpaid because of my job. I made $37,000 and now the Social Security Administration says I owe them $8,800 because I made too much and they have withheld my $2,000 monthly Social Security payment. I am close to the maximum allowable again already this year. So, I am looking at quitting my job so I don’t go over, but they are holding my payments so then I would have no money. Any help would be appreciated. Signed: Frustrated by Social Security

Dear Frustrated: You are being affected by Social Security’s “earnings test” which applies to everyone who collects early Social Security and also works before reaching their full retirement age. If your earned income exceeds the annual limit (which was $19,560 for 2022), Social Security will withhold $1 in benefits for every $2 you are over the limit. If you earned $37,000 in 2022 you were more than $17,000 over the limit and owe half of that back to Social Security. They usually recover what you owe by withholding your future benefit payments, so they won’t pay you benefits until they have recovered that $8,800, after which your benefits will resume - but only for a while.

If you are working full time and also collecting early Social Security benefits, the earnings test lasts until you reach your full retirement age, which for you is 66 years and 8 months. The earnings limit goes up a bit each year – for 2023 it is $21,240 – but if you continue to work full time, you’ll receive another overpayment notice and have more benefits withheld. A better approach might be to contact Social Security in advance and tell them what your 2023 earnings are expected to be, thus permitting them to suspend your benefits in advance and avoid overpaying you. I’m afraid there is no way around this – collecting early benefits while working full time means the “earnings test” will affect your benefit payments.

The “good news” in all of this is that when you reach your full retirement age, you will get time-credit for all months your benefits were withheld. By that I mean they will, at your FRA, recalculate your benefit entitlement as if you had claimed later (later by the number of months you had benefits withheld), which will result in a higher monthly payment after your FRA. In that way, you may eventually recover some or all of the benefits withheld by receiving a higher monthly amount for the rest of your life, starting at your full retirement age.

I suggest you contact Social Security at 800-772-1213 (or at your local office) and tell them you want to provide them with an estimate of your 2023 earnings because you are working and collecting early Social Security benefits. They will work with you to suspend your benefits for an appropriate number of (additional) months to avoid another overpayment situation. Note, you’ll likely need to do this each year you continue to work full time, until the year you reach your full retirement age when the earnings limit more than doubles. The earnings limit goes away when you reach your full retirement age.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association. NSSA® and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit the website (amacfoundation.org/programs/social-security-advisory) or email ssadvisor@amacfoundation.org.