You’re Losing Thousands in Social Security If You Miss This Earnings Limit

Social Security is designed to provide a financial lifeline for seniors who can no longer work and didn’t save enough money to make ends meet. It’s also a useful income source for people who have been diligently building their nest eggs, but taking out Social Security too early can result in losing thousands of dollars if you are unaware of a key limit.

This loss goes beyond the amount you could have received if you deferred your benefits. This limit specifically applies to people who are under the full retirement age who continue to work while collecting Social Security. Here’s what you need to know.

Read Next: 3 Biggest Problems Facing Social Security in 2026 

For You: 7 Clever Ways Retirees Are Earning Up To $1K per Month From Home 

Since Social Security is meant for retirees, the program imposes limits on people who collect Social Security before reaching full retirement age. According to the Social Security Administration (SSA), it will withhold $1 of every $2 you earn above $24,480 in annual income.

It gets a little better in the months leading up to your full retirement age. During those months, Social Security only withholds $1 of every $3 you earn above $65,160. Your full retirement age depends on when you were born, but anyone who was born in 1960 or later will reach full retirement at exactly 67 years old, per the SSA.

The withheld money doesn’t mysteriously vanish. Social Security takes those withheld earnings and spreads them across future Social Security checks. When you reach full retirement age, you will end up with higher Social Security checks for the rest of your life if some of your benefits have been withheld. However, you can get better growth by delaying how soon you take out Social Security instead of rushing to take it out early.

Keep Financial Literacy Month going — learn how the MoneyLion app helps you track, manage and move your money in one place

This withholding rule disincentivizes high earners from accessing Social Security while working at their jobs. For instance, someone who earns $100,000 per year will have $37,760 withheld from their Social Security payouts. That’s because $100,000 is $75,520 above the $24,480 limit. Taking $1 out of every $2 results in $37,760 in withholdings.

The $24,480 limit applies to each individual, regardless of whether they are filing as individuals or jointly with their spouse. If both spouses are high earners who are accessing Social Security before reaching full retirement, they will be subject to withholding. However, if one spouse is working and the other spouse is unemployed, the unemployed spouse can take out Social Security without worrying about withholding. Granted, the employed spouse’s income will influence how much of the unemployed spouse’s Social Security benefits are taxed.