Higher earnings limit applies in the year worker reaches 66

My recent column on how the Social Security earnings cap is applied during the first year of retirement triggered several more questions.

Normally, people who collect Social Security benefits before the full retirement age of 66 must forfeit $1 in benefits for every $2 earned over a prescribed limit. For this year, the earnings cap is $15,120.

It is important to note that these benefit reductions aren't truly lost but merely deferred. Benefits will be increased at full retirement age to account for benefits that were withheld due to earnings.

So, say an individual collected benefits at 62 and ultimately forfeited 12 months' worth of benefits over the next four years. Once that person reached full retirement age, Social Security would recalculate the benefits as if they began to be collected at 63, instead of 62, resulting in a higher amount going forward.

As I noted in my recen