Due to a major job loss 6 years ago, I had to take my social security at 62. Since then, (18 mos later) I found a job paying a 10th of my prior earnings. I made 35,000 in 2015 and SS had contacted me stating I must repay over $9000 of what I collected in 2015 within 30 days. Then the will reduce my benefits. First are the benefits lost or will they go back into my account? Second I don't have the money to repay - what happens, Can I suspend the benefit so it may become greater? I don't know what to do. I don't want to collect it if I have a chance to grow it, even with the small income I now have. This is critical for me as I was caught in the great economic storm in 2008-9 Unable to get a job, I had to use my retirement savings to live - now depleted, this is all I have.

Hi,

To answer your first question, the $9000 you return to Social Security does not go back into your account. What will happen instead, is that the $9000 will go back into the Social Security trust fund, and your benefit amount will increase when you reach full retirement age in order to credit you for months of benefits lost due to the earnings test (https://www.ssa.gov/planners/retire/whileworking.html). I'll explain with the following example:

John files at age 63 for reduced benefits. As a result, instead of receiving his full rate (PIA) of $2000, he receives $1600, or 20% less. The 20% reduction is based on the expectation that he will receive benefits for 36 months prior to reaching full retirement age. However, if John earns $34920 per year, Social Security (SSA) will withhold, or he will have to repay, $1 of benefits for each $2 of earnings in excess of the earnings test exempt amount of $15720, or $9600 (i.e. ($34920-$15720)/2). Given John's monthly benefit amount of $1600, SSA will need to withhold 6 months of his benefits to recover the required $9600.

Assuming that the same earnings and withholdings occur for all 3 years that John is entitled to benefits prior to his full retirement age (FRA) of 66, he will only end up receiving benefits for 18 months of reduced benefits, and the other 18 months will be withheld to recover the $1 for $2 required by the earnings test. As a result, when John reaches FRA, SSA will recalculate his benefit to remove half of the 20% reduction initially applied to his PIA. That will raise John's benefit amount from $1600 per month, to $1800 per month effective with the month he reaches FRA.

Back to you, now. If you don't refund the $9000 overpayment you received, SSA will recover it by stopping your checks for as long as it takes to recoup the overpayment. Note, however, that if you are continuing to earn $35000 per year, you will not be entitled to at least some of your ongoing checks. Therefore, SSA will need to withhold some of your checks due to your current earnings, and additional checks to recover your overpayment.

In order to keep the situation from getting worse, make sure to tell SSA how much you expect to earn this year, so that they can make the necessary withholdings. And, continue to update them with your expected earnings every year until you reach age 66.

Best, Jerry