At Full Retirement, How Much Can You Earn?

Understanding how working impacts Social Security benefits is important for individuals nearing or in retirement. The rules surrounding earnings affect monthly benefits, making it valuable to comprehend how income is treated by the Social Security Administration (SSA). Navigating these regulations helps retirees maximize benefits and make informed decisions about continued employment.

Understanding Full Retirement Age

Full Retirement Age (FRA) is the age at which an individual can receive their full, unreduced Social Security retirement benefits. This age is not universal; it depends on an individual’s birth year. The SSA established a schedule for FRA based on birth year.

For those born in 1943 through 1954, their Full Retirement Age is 66. It then gradually increases by a few months for each subsequent birth year. For example, individuals born in 1955 have an FRA of 66 and 2 months, while those born in 1959 have an FRA of 66 and 10 months. For anyone born in 1960 or later, their Full Retirement Age is 67. Knowing your specific FRA is important because it dictates when you become eligible for your primary insurance amount without reduction.

Social Security Earnings Limits Before Full Retirement Age

If an individual begins receiving Social Security benefits before Full Retirement Age and continues to work, their benefits may be subject to earnings limits. These limits mean a portion of Social Security benefits could be temporarily withheld if income exceeds specific thresholds. This mechanism is known as the Annual Earnings Test.

Two distinct earnings limits apply before FRA. For those younger than Full Retirement Age for the entire year, the Social Security Administration (SSA) deducts $1 from benefits for every $2 earned above the annual limit. For 2025, this limit is $23,400. A different, higher earnings limit applies in the year an individual reaches Full Retirement Age, but only for the months prior to their birthday month.

In the year an individual reaches FRA, the SSA deducts $1 from benefits for every $3 earned above a higher limit ($62,160 for 2025) until the month they reach FRA. For instance, if someone reaches FRA in August, only earnings from January through July count towards this limit. Benefits withheld due to these earnings limits are not permanently lost; they are factored into a recalculation of benefits once the individual reaches Full Retirement Age.

Earnings After Reaching Full Retirement Age

Once an individual reaches Full Retirement Age, the rules regarding earning income change significantly. At this point, no earnings limits are imposed by the Social Security Administration. This means beneficiaries can earn any amount from work without their Social Security benefits being reduced or withheld.

This rule applies starting the month an individual attains Full Retirement Age. For example, if someone’s FRA is 67 and their birthday is in July, any earnings from July onward will not affect their Social Security benefits. This provides flexibility for individuals who wish to continue working full-time or part-time without concern for benefit reductions.

Social Security benefits withheld prior to Full Retirement Age due to exceeding earnings limits are not lost. The Social Security Administration automatically recalculates the benefit amount to account for previously withheld benefits. This recalculation results in a permanent increase to the monthly benefit amount received once FRA is attained, compensating for earlier reductions. This adjustment happens automatically as the SSA receives updated earnings information from tax documents.

Income That Counts Towards Limits

When considering Social Security earnings limits, it is important to understand what types of income are included. Only specific forms of income count towards these limits. This includes wages from employment and net earnings from self-employment.

Conversely, many other types of income do not count towards Social Security earnings limits and will not affect benefits. These non-countable income sources include pensions, government retirement benefits, military retirement pay, and annuities. Investment income, such as dividends, interest, capital gains, and distributions from retirement accounts like IRAs or 401(k)s, are also not counted towards these limits.

Reporting Earnings to Social Security

Individuals receiving Social Security benefits and still working, particularly before Full Retirement Age, must report earnings to the Social Security Administration (SSA). Timely and accurate reporting is important to ensure benefits are paid correctly and to avoid overpayments or underpayments.

Several methods are available for reporting wages to the SSA. Beneficiaries can report earnings online through their “my Social Security” account. Other options include mailing or faxing pay stubs to a local Social Security office, or visiting an office in person. Some individuals, particularly those receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), may also have access to automated telephone wage reporting systems or mobile applications. Keep detailed records, such as pay stubs and receipts, to verify reported earnings if needed.