I hear one or both of these rumors about Social Security benefits all the time from readers.

Rumor 1: "I have been told that if I take a reduced Social Security benefit at 62, when I reach my full retirement age, my benefit will be bumped up to my full retirement age amount."

Rumor 2: "I have been told that if I take a reduced Social Security benefit at 62, but have some of my benefits withheld because I worked and earned over the annual threshold limit, all that money will come back to me when I reach full retirement age."

The first rumor is absolutely false. If you take reduced benefits, you will always get reduced benefits.

The second rumor is also false. But I understand how some people might get confused because in some cases, a benefit rate might get adjusted slightly upwards when a Social Security beneficiary reaches full retirement age. And I'm going to spend the rest of this column explaining that.

There is a little-known Social Security rule that may benefit some individuals who began receiving Social Security checks before full retirement age and therefore took a reduction in their monthly benefits, but then decided to return to work. And now they wonder if their early retirement reduction is permanent. The answer is it might not be. And that's because a software program built into the Social Security Administration's computers kicks in after you reach full retirement age, which is designed to remove the reduction factor for any months you didn't get a Social Security check because of the SSA's earnings penalty rules. The program is called the Adjustment to the Reduction Factor, or ARF.

Before I explain how the ARF works, I've got to give a little background. And I will start out with a quick overview of the earnings penalty. The law says that one dollar must be withheld from your Social Security checks for each two dollars you earn over a certain threshold that changes every year. The 2025 threshold is $23,400. Here is a simple example. Hank is 65 and getting Social Security, but he is working and plans to make $33,400 in 2025. That is $10,000 over the $23,400 threshold, so half of that, or $5,000, must be withheld from his Social Security checks in 2025.

Now, some more background. I've got to explain the reduction factors for early retirement. The law says if you start your Social Security checks before full retirement age, your benefit will be reduced five-ninths of one percent for each of the first 36 months of reduction and five-twelfths of one percent for any additional months. That's a bit too convoluted for the examples I'm going to use in this column. So I am going to keep things simple by saying that your benefit is reduced by about one-half of one percent for each month you start benefits before full retirement age.

For example, let's say that Hank's full retirement age is 67. But he started getting reduced benefits when he was 65. That's 24 months early, so his Social Security benefit was reduced by about 12%. In other words, at age 65, Hank started getting about 88% of his full retirement age benefit.

And with that bit of background, I can close the circle on my ARF explanation. In my above example, Hank started getting an 88% benefit rate when he took his Social Security at age 65. And because his earnings exceeded the penalty threshold, I pointed out that $5,000 had to be withheld from his 2025 benefits. Let's assume his monthly check is $2,500. In other words, the SSA held back two of Hank's Social Security checks in 2025 because of his excess earnings. And let's further say that Hank's earnings in the following year caused two more of his Social Security checks to be withheld.

Once Hank turns 67, the ARF program kicks in. That program says Hank's ongoing permanent benefit can only be reduced for those months he actually received a Social Security check before he turned his full retirement age. In our example, Hank only received 10 Social Security checks in 2025 and will get another 10 checks in 2026. In other words, he will have received XC 20 of his 24 Social Security checks before reaching full retirement age.

So instead of the initial 24 month, or 12% reduction, Hank's ongoing benefit is adjusted to give him only a 20 month, or 10%, reduction. In other words, starting at age 67, Hank will get a two percent boost in his Social Security check. Actually, the ARF program usually isn't finished running until several months after full retirement age, but it will be retroactive to the month of FRA.

And by the way, this ARF procedure is something that happens automatically after you reach full retirement age. You don't have to apply for the increase. If you signed up for Social Security before your full retirement age but worked and had some of your benefits withheld due to the earnings penalty rules, several months after FRA, you will get an unexpected Social Security check in the mail that includes some back payments. I frequently hear from readers who ask me about this unexpected payment. I tell them to be patient and that a letter of explanation will soon arrive in their mailbox. The letter doesn't use the term "ARF." That's a bit of in-house SSA jargon. But it does explain that your initial reduction factor has been adjusted because some of your benefits were held back while you were working.

If you have a Social Security question, Tom Margenau has two books with all the answers. One is called "Social Security — Simple and Smart: 10 Easy-to-Understand Fact Sheets That Will Answer All Your Questions About Social Security." The other is "Social Security: 100 Myths and 100 Facts." You can find the books at Amazon.com or other book outlets. Or you can send him an email at [email protected]. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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