Are Widow’s Benefits Reduced for Earnings If Claimed Before FRA?

If a client starts the SS widow benefit before her FRA and continues to work, is the benefit reduced for earnings over the limit?

Yes, if a client begins receiving Social Security widow benefits before reaching her Full Retirement Age (FRA) and continues to work, her benefits are indeed subject to the earnings test. This means that if her earnings exceed the annual limit, her widow benefits will be reduced.

For 2024, the earnings limit is $22,320. If the client earns more than this amount, $1 in benefits will be withheld for every $2 earned over the limit. It's important to note that this reduction applies only to earnings before reaching FRA. Once she reaches FRA, the earnings limit no longer applies, and she can earn any amount without her benefits being reduced.

Additionally, widow benefits are adjusted twice: once at age 62 and again at FRA. The first adjustment occurs when she begins collecting benefits before FRA, resulting in a permanent reduction in the monthly amount due to early filing. The second adjustment happens at FRA, where Social Security recalculates the reduction factor based on the number of months she received reduced benefits and any months where benefits were withheld due to excess earnings. This recalculation can slightly increase the monthly benefit at FRA.

It's crucial for clients to consider the potential impact of continuing to work while receiving widow benefits, as the reduction for excess earnings could significantly affect their monthly income until they reach FRA.

The content on this blog is for informational purposes only and is not legal, financial, or professional advice. Social Security rules change periodically, so some information may become outdated. For the most accurate advice, consult a certified National Social Security Advisor (NSSA®). Social Security Professionals, LLC, and NSSA® are not responsible for any errors, omissions, or actions taken based on this blog's content. Use of this blog does not create a client relationship, and all information is provided "as is" without guarantees. By using this blog, you agree to hold Social Security Professionals, LLC, and NSSA® harmless from any claims or liabilities arising from its content. For personalized guidance, contact an NSSA® professional.