Rethinking Retirement

By David G. Freitag, Financial Planning Consultant with MassMutual
January 22, 2023

fyi50+: Sometimes, retirement works out just fine. Other times, it doesn’t go as smoothly, and a worker might discover a new opportunity to return to work. I asked Dave Freitag how this return to work might impact a worker’s decision to take Social Security benefits early.

David Freitag: Heidi, this is not all that uncommon. Often, when a worker retires, they might try something new and exciting to do. As the old saying goes, “When you close one door, another door opens.”

For the person who has filed for Social Security benefits before the full retirement age, the Social Security rules about working before the full retirement age come into play. This is called the earnings test. For 2023, the SSA will hold back a dollar for every two dollars you make over $21,240. Using this formula, it is easy to see that an earned income of $65,000 would cause a yearly holdback of $21,880, or $1,823 a month. This figure is not good news.

However, the year you reach full retirement age (FRA), the formula is different. The 2023 FRA formula for the holdback is every three dollars you earn over $56,520, the SSA withholds a dollar. This is not great news either. But this FRA earnings test rule is much more liberal than the rule that applies before the year of your full retirement age.


fyi50+:  What happens to the money that is withheld? Is it lost forever?

Dave: Here is some good news. At full retirement age, the SSA calculates the amount of the withheld money and gradually start to pay it back in the form of increased monthly benefits. The withheld benefits are not paid back in a lump.

They are paid back a little at a time and calculated for the benefits to all be returned by life expectancy.


fyi50+: How does the Social Security Administration know your life expectancy?

Dave: It doesn’t. What it does know are the actuarial statistics based on the law of large numbers. The actuaries at the SSA have an extensive database of life expectancy demographics. These demographics power the online calculator for life expectancy found via the Life Expectancy Calculator at Give it a try, but remember the answer does not specifically apply to you. Your longevity is driven by family history, health, occupational stress, lifestyle, and economic factors unique to you.

Workers who have a long life in retirement will recover all their withheld benefits. On the flip side, workers who do not have a long retirement life will not. For people who do not live a long time, the withheld benefits will be returned to the SSA and used to support those who live a long time.


fyi50+: Is there any other way to regain lost benefits because of working before full retirement age?

Dave: For those who started benefits before full retirement age and want to increase them with delayed retirement credits, the SSA has a rule called “voluntary suspension.” You can notify the SSA at full retirement age to stop benefit payments.

In return, when you restart benefits, you will have earned two-thirds of 1% a month, or 8% a year, in increased payments for life. Voluntary suspension can be a great way to lock in those higher benefits forever for people who have found a new career or opened that new door or lifetime opportunity.

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