Can I Work and Still Collect Social Security?

Many individuals consider working while receiving Social Security benefits. It is possible to work and collect benefits simultaneously, but rules and financial implications can affect benefit amounts and taxability. Understanding these factors helps in making informed decisions about retirement and continued employment.

Understanding Earnings Limits

Social Security benefits can be temporarily reduced if an individual earns above certain limits before reaching their Full Retirement Age (FRA). These earnings limits apply only to income from wages or net earnings from self-employment, including bonuses, commissions, and vacation pay. Income sources such as pensions, annuities, investment income, interest, or capital gains do not count towards these limits.

For individuals who are under their full retirement age for the entire year, the Social Security Administration (SSA) reduces benefits by $1 for every $2 earned above the annual limit. In 2025, this annual earnings limit is $23,400. For example, if someone earns $25,000, which is $1,600 over the limit, their Social Security benefits would be reduced by $800.

A special rule applies in the “first year of retirement,” the year an individual starts receiving benefits before reaching full retirement age. This rule allows a higher monthly earnings limit. Benefits can be received for any month where earnings fall below this threshold, regardless of higher earnings earlier in the year. In 2025, for those under FRA for the entire year, this monthly limit is $1,950.

When an individual reaches full retirement age within the year, a different, higher earnings limit applies to earnings made in the months before reaching FRA. For 2025, this limit is $62,160. Benefits are reduced by $1 for every $3 earned over this higher limit, but only for earnings up to the month before reaching full retirement age.

Navigating Full Retirement Age

Full Retirement Age (FRA) is a specific age set by the Social Security Administration when an individual can receive their full, unreduced Social Security retirement benefits. This age varies depending on the birth year. For those born between 1943 and 1954, FRA is 66, while for individuals born in 1960 or later, it is 67. Birth years between these ranges have an FRA between 66 and 67, increasing by a few months for each subsequent birth year.

Upon reaching Full Retirement Age, the earnings limit no longer applies, allowing individuals to earn any amount of income without their Social Security benefits being reduced. This change takes effect starting with the month an individual reaches their FRA. For example, if someone reaches FRA in August, earnings limits apply only through July of that year.

If benefits were reduced or withheld before FRA due to earning above the limits, the Social Security Administration automatically recalculates the benefit amount once the individual reaches full retirement age. This recalculation gives credit for the months when benefits were not paid, typically resulting in a higher monthly benefit.

Reporting Your Earnings to Social Security

Accurately reporting earnings to the Social Security Administration (SSA) ensures correct benefit amounts and avoids overpayments. Not reporting earnings, or providing inaccurate information, can lead to the SSA determining benefits were overpaid, requiring repayment. The SSA detects unreported income through various methods, including IRS data matching.

Individuals should report their work activity whenever they start or stop working, or when there is a significant change in their earnings. This reporting should ideally occur no later than the 10th day of the month following the month of the change. For instance, if earnings change in May, the SSA should be notified by June 10th.

Reporting can be done through several methods: using the online “my Social Security” account, calling the SSA by phone, visiting a local SSA office, or sending information by mail. When reporting, individuals need to provide estimated annual earnings or details about employment status changes. The SSA recommends keeping receipts or confirmation of all reports. Failing to report earnings can result in benefit overpayments and, in some cases, penalties like withholding future benefits for several months.

Federal Taxation of Social Security Benefits

Social Security benefits may be subject to federal income tax, particularly when combined with other sources of income from working or investments. Whether benefits are taxable depends on an individual’s “combined income,” which is calculated as adjusted gross income (AGI) plus any nontaxable interest, plus one-half of the Social Security benefits received. This combined income determines the taxation threshold.

There are two tiers for federal taxation of Social Security benefits. For single filers, up to 50% of benefits may be taxable if their combined income is between $25,000 and $34,000. For married couples filing jointly, this 50% taxation applies if their combined income is between $32,000 and $44,000. If combined income exceeds these higher thresholds—over $34,000 for single filers or over $44,000 for married couples filing jointly—up to 85% of Social Security benefits may be subject to federal income tax.

The Social Security Administration sends a Form SSA-1099, Social Security Benefit Statement, annually. This form details the total benefits received for the year, which is essential for tax preparation. While the focus is on federal taxation, a few states may also tax Social Security benefits. Individuals can request to have federal income taxes withheld from their monthly Social Security payments by submitting Form W-4V to the SSA.