I turn 62 in a few weeks and am retired and am contemplating filing for SS. I work part time and will make a bit more, say $6000, than I can make without it affecting my social security. If I make $6000 more than the allowed amount for 2020 and therefore have a $3000 decrease of social security payments, what happens to that $3000? I thought I read that it gets added back into the calculation at full retirement age but an SSA rep just told me it goes away sort of as a penalty for still working.

Hi,

If you file for benefits prior to full retirement age (FRA) and some of your benefits are withheld due to the earnings test, your benefit rate would be recalculated effective with the month you reach FRA. What Social Security would do at that time is remove the percentage reduction that was applied for any months that your benefits end up not being paid.

For example, say you file at age 62 and your benefit rate is reduced for age by 28%. Then let's say that between age 62 and FRA, 12 months of your benefits ended up being withheld because of your earnings. In that case when you reached FRA the percentage reduction in your benefit rate would be adjusted from 28% to 23%, effective increasing your monthly benefit rate by roughly 5%. Obviously, the amount of the change would vary depending on how many months of your benefits were withheld.

Best, Jerry