Earnings Limit and Widow(er) Benefits: What You Need to Know

We have a client who is 61 and was recently widowed.  She is still working, and not sure about her official retirement. Can you refresh my memory on how they rectify benefits if she begins collecting and then exceeds the earnings limit? I seem to remember it eventually being adjusted for any months she was docked for the earnings test but can’t remember the details. Also, are the earnings numbers the same for widows as they are for all retirees?

The earnings test applies to widow(er) benefits in the same way it does for retirement benefits. If your client earns over $21,240, Social Security will withhold $1 of benefits for every $2 over the limit.

Any month in which your client does not receive the full benefit due to the earnings test will be considered a "credit month." Social Security will adjust the reduction factor for these months when she reaches age 62 and again at her Full Retirement Age (FRA), resulting in an increase in her benefits. This ensures that she is eventually compensated for any months where her benefits were reduced due to the earnings limit.

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