What will happen if you earn over $51,960 while reaching FRA this year?

When you earn over the earnings limit while reaching your Full Retirement Age (FRA), the Social Security Administration has specific rules that apply to your benefits. In this case, since you are earning above the threshold of $51,960, for every dollar you earn over this limit, you will lose one dollar in benefits. This policy is designed to gradually phase out benefits for individuals who have not yet reached FRA but are earning substantial income.

This reduction is only applied to earnings exceeding the limit, and once you reach your FRA, the earnings limit no longer affects your benefits. Additionally, the amount that is withheld due to excess earnings may be returned to you later in the form of increased monthly benefits, as the Social Security Administration recalculates your benefits once you reach FRA considering the years you had reduced benefits.

Understanding this mechanism is crucial for planning your finances as you approach retirement, as it allows individuals to maximize their Social Security benefits while considering their earning potential.