Social Security's First Year Rule and Withdrawing From Social Security
Listen to this episode
“In this Ask Rusty edition, a 63 year old man, still working part time, is applying for Social Security, but just realized that his work earnings may impact his Social Security benefits. He asks about the penalties for exceeding the earnings limits, and wonders how to avoid them. Rusty says the Social Security rules for working when collecting early SS benefits are “tricky,” especially during the first year collecting. But he explains how those rules work and what can be done to ease the financial stress they cause.”
Dear Rusty: I am 63 years old, and about to apply for my Social Security benefits. I am self-employed but only working part time. I know about Social Security’s annual earnings limit but recently I learned I must also be concerned about a monthly earnings limit of $2,040. My questions are:
1) How do I find out if I will be subject to a monthly earning limit of $2,040 per month? I thought it was only evaluated annually.
2) If I choose to cancel Social Security within the first year or after, what are the penalties? Would I have to pay them back for the whole amount for the whole time that they paid me? Which makes no sense, since I have been paid into SS since I was 13 years old.
Can you help me understand this? Signed: Claiming Early and Still Working
Rusty’s answer in brief
In the first year of collecting early benefits, the monthly limit matters only if your earnings for the year go over the annual limit ($24,480 in 2026). In that case Social Security checks each month after your benefits started, and any month over the monthly limit pays no benefit, which can mean an overpayment to repay.
Within 12 months of applying, you can withdraw your application, but you must repay everything you were paid; that resets your record so the benefit keeps growing. After 12 months you cannot withdraw, but at full retirement age the earnings limit ends and you can suspend benefits to earn delayed retirement credits.
This recording presents the viewpoints of the AMAC Foundation’s Social Security Advisory Staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA and the AMAC Foundation are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government. To request additional information, contact our Advisory Staff at 888-750-2622, or email us at SSAdvisor@AmacFoundation.org.