When you’re collecting Social Security benefits, you must understand the rules for how the program works. Unfortunately, if you fail to follow the rules, you could face serious consequences.
In fact, there’s one particular requirement that could be very risky not to fulfill. Here’s what it is.
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You need to follow this rule if you’re under your full retirement age
If you’re under your full retirement age (FRA), you must alert the Social Security Administration if you plan to work and collect Social Security retirement benefits at the same time as you’re earning income from your job.
There are earnings limits if you work while you’re under your FRA. In 2026, for example, you can earn up to $24,480 if you won’t reach FRA at all during the year, and you can earn up to $65,160 if you’ll reach FRA at some point but haven’t yet. These limits adjust over time because of inflation, but there’s always a cap on how much you can make until you’ve hit your FRA and can work as much as you want.
Once you earn above the allowable thresholds, the Social Security Administration (SSA) temporarily withholds some of your payments. Your benefits are then recalculated at FRA to account for the income you forfeited.
Due to the earnings limits, you must report the money you’re making to Social Security when you’re under FRA and working, so the SSA can adjust your benefit accordingly. And, if the amount you expect to earn ends up being different from the income you actually collect, you should call the SSA right away to let it know.
If you don’t report your earnings properly, you could end up with a Social Security overpayment, which can have serious consequences — including potentially losing up to 50% of your monthly benefit.
How an overpayment could cost you 50% of your Social Security benefits
If you’re overpaid Social Security benefits that you shouldn’t receive, you’ll probably get an overpayment letter in the mail.
If you do, you’re expected to pay back the amount you were overpaid within 30 days. A failure to submit payment of what you owe could result in as much as a 50% withholding of your Social Security retirement benefits.
You can appeal if you don’t believe you were overpaid, but that wouldn’t be the case if you legitimately received benefits you shouldn’t have because you were working. You could also request a waiver if you can’t afford to repay the SSA and believe the overpayment wasn’t your fault. But this approach may not be successful if you fail to report your earnings as required.
So you may find that there’s no way to avoid this 50% loss to your benefits. It could continue until you’ve repaid the entire overpayment, which could be a substantial amount of money in some cases.
Now, it’s true that when you report your earnings, if you go above the threshold, you temporarily forfeit $1 for every $2 above the $24,480 limit or $1 for every $3 above the $65,160 limit. But it’s most likely better to miss out on this Social Security money while you’re working, and can prepare for it as part of your retirement planning process, than to lose the money unexpectedly when the SSA happens to discover you were overpaid.
Make sure you report your wages if you’re working when you’re under full retirement age. Doing so is critical to protect your income and to avoid having to over rely on a 401(k) or other retirement plan later because Social Security starts taking your benefits to get back money it shouldn’t have paid out.
