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By AMAC Certified Social Security Advisor Russell Gloor, Association of Mature American Citizens

Dear Rusty: I will be turning 63 soon. Can I apply for Social Security and continue to work? Would I be limited to how many hours or how much I could make? I know my monthly Social Security amount would be cut by 30%, or somewhere around there, but how would working affect me? I was trying to read up on this, but the $1 and $2 thing confused me. I have an offer to take a work-at-home position and need to decide soon, but it is a cut in income. The cut would be okay if I could draw my Social Security too. Signed: Wanting Work at Home

Dear Wanting: If you claim your Social Security to start in the month you turn 63, you’ll be claiming four years before your full retirement age (FRA) of 67, which means your monthly benefit at 63 will be about 25% less than it would be if you claimed Social Security at age 67. And if you are working before your FRA, you’ll be subject to Social Security’s “earnings test.”

The 2024 earnings limit for those collecting early Social Security benefits is $22,320 (this limit changes annually). If your annual earnings exceed the limit, Social Security will assess a penalty of $1 for every $2 you are over the limit. They will recover that penalty amount by withholding future benefits until they recover what you owe. If your work earnings are under the annual limit, you will get all your monthly Social Security benefits. But if you exceed the limit, they will find that out after you submit your income tax return (the following year) and issue you an overpayment notice, telling you how much you owe for exceeding the limit last year. They will then withhold your benefits until they get back what you owe, or you can repay them in a lump sum. To avoid the overpayment notice, it is best to inform Social Security in advance that you will exceed the annual earnings limit, and they will simply withhold your monthly Social Security benefits during the year for enough months to avoid overpaying you.

So, what you should do depends largely on how much your earnings from your new work-at-home position will be. If your earnings are below the annual limit, no penalty will be assessed. If you only exceed the annual limit by a little bit, then you can still work and earn and simply repay them what is owed for exceeding the limit (or have your Social Security benefit temporarily withheld). If you only exceed the earnings limit by a little, you’ll still get benefits for most months of the year. But if you significantly exceed the annual earnings limit, you could even be ineligible to receive Social Security benefits until you either earn less or reach your full retirement age (the earnings limit goes away at your FRA).

So, what you should do depends on what “a cut in income” means in terms of your expected annual earnings amount. If your total annual earnings will be under the annual limit, your Social Security benefit won’t be affected. If you only exceed the limit by a little bit, then you will get Social Security benefits for most months of the year. But if your annual earnings are significantly over each year’s annual earnings limit, then you won’t get Social Security benefits for most months of the year and may even be temporarily ineligible to receive benefits.

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