What Social Security pays you, what it withholds and why

Social Security was designed with retirees in mind, so those who work and take retirement benefits before their full retirement age get temporarily reduced benefits. In 2020, beneficiaries under full retirement age have $1 in benefits held back for every $2 they earn from working above $18,240 a year ($1,520 a month). In 2021, that rises to $18,960 a year, or $1,580 a month.

In the year you hit full retirement age, the earnings test limit leaps to $50,520 a year ($4,210 a month) as of 2021, up from $48,600 a year ($4,050) in 2020, and SSA holds back $1 for every $3 you earn. The month you reach full retirement age, Social Security stops holding money back because of your work income and there are no longer earnings limits. Social Security effectively returns the money it withheld by increasing your monthly payout when you reach full retirement age.