What to do About Social Security if You Return to Work

Ask Rusty – I'm Returning to Work; What Should I Do About Social Security?

Dear Rusty: I started collecting Social Security at age 62 earlier this year. I had an opportunity to partner in a new business this year that will allow me to earn about $200,000 in 2024. Because this is significantly above the allowed earnings when collecting early benefits, I need advice on how I handle this with the Social Security Administration. Am I supposed to call them and advise them of my change in income for 2024? If so, am I going to be penalized in any way? I expect they will stop all payments in 2024 once I alert them to the change. Will I be eligible for Social Security payments when I retire again? This is planned to take place before I reach full retirement age of 67. For information, my 2023 income will not exceed the 2023 allowable income limit. Signed: Un-retiring Temporarily.

Dear Un-retiring: You have a couple of options, considering that you recently claimed early Social Security benefits but are returning to work with income significantly more than the 2024 earnings limit of $22,320.

The first is to simply contact Social Security and tell them you are returning to the work force and tell them your anticipated 2024 income. They will suspend your SS benefits for all of 2024 (to avoid overpaying you and making you return those 2024 payments later). If you plan to continue in your new business beyond 2024, you can advise them of that as well and they will continue the suspension of your benefits, until such time as you either discontinue working or reach your full retirement age (the earnings test no longer applies after you reach your FRA). At that time, SS will resume your monthly Social Security payments and, at your FRA, will give you time credit for all months your benefits were suspended, providing you with a higher monthly payment after your full retirement age is attained (with an adjustment for benefits already paid).

Your other option is to contact Social Security soon and request that your recent application for Social Security benefits submitted earlier this year be withdrawn. You have 12 months from the date of your application to do this, but you will need to repay Social Security all money which they paid to you or on your behalf (including your monthly payments, any income tax you had withheld from those payments, and any dependent benefits which might have been paid based on your record). That will effectively "wipe the slate clean" with Social Security and will be as though you had never claimed, allowing you to simply wait until you stop working, or until your FRA, or even beyond your FRA, to re-apply for Social Security at a higher monthly amount. The advantage of this option is that when your benefit restarts there will be no adjustment (reduction) for past benefits paid.

What I suggest you not do is simply wait to see what happens. That would result in Social Security catching up after the IRS informs them of your 2024 earnings, resulting in you receiving an Overpayment Notice from the SSA demanding repayment of 2024 benefits paid. In that case, you would need to quickly repay Social Security in a large lump-sum or have your SS benefits withheld until the debt for exceeding the earnings limit was repaid. In a nutshell, I suggest you call Social Security and tell them you are returning to work, what your earnings are expected to be, and for how long.

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). 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 our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.

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