What can result from excess earned income for Social Security beneficiaries who are under the full retirement age?

Beneficiaries of Social Security who are under the full retirement age must adhere to certain income limits regarding earned income. When their earned income exceeds these limits, it can lead to a partial or complete reduction in their benefits for the year. This is due to the Social Security Administration’s earnings test, which evaluates how much a beneficiary is earning and adjusts benefits accordingly.

For every dollar earned above a specified threshold, a portion of the benefits may be withheld. This approach aims to encourage early retirees to transition smoothly into the workforce while ensuring that Social Security funds are managed effectively. The understanding of these income limits is crucial for beneficiaries to avoid unintended loss of benefits and helps them make informed decisions about working while receiving Social Security.