How Much Can I Earn and Still Draw Social Security?
Discover how much you can earn while collecting Social Security benefits. Learn the rules that impact your payments at different ages.
Social Security benefits provide a foundational income stream for many individuals in retirement or due to disability. Earning income from work can affect the amount received. The Social Security Administration (SSA) has specific rules and limits on how much a beneficiary can earn before benefits are reduced. These regulations balance income replacement with encouraging workforce participation. The impact of earned income on Social Security payments depends on the beneficiary’s age relative to their full retirement age.
Understanding Earnings Limits Before Full Retirement Age
Individuals receiving Social Security benefits who are younger than their full retirement age are subject to annual earnings limits. If earnings exceed this limit, a portion of benefits will be withheld. For example, in 2025, if a beneficiary is under full retirement age for the entire year, the annual earnings limit is $23,400. For every $2 earned above this threshold, the SSA will deduct $1 from benefit payments. This is known as the “retirement earnings test.”
Consider a beneficiary under full retirement age in 2025 earning $32,320, which is $8,920 more than the $23,400 limit. Their Social Security benefits would be reduced by $4,460, calculated as $1 for every $2 over the limit ($8,920 / 2). These withheld benefits are not permanently lost. The SSA recalculates the monthly benefit amount once the individual reaches full retirement age, potentially leading to a higher monthly payment for life.
Rules for the Year You Reach Full Retirement Age
A different set of earnings limit rules applies in the calendar year an individual reaches their full retirement age (FRA). During this transitional year, a higher earnings limit is in place for the months before the month the individual attains FRA. For 2025, this higher earnings limit is $62,160. For every $3 earned above this limit in the months leading up to FRA, $1 in benefits will be withheld.
To illustrate, imagine a beneficiary reaching full retirement age in August 2025 who earns $63,000 from January through July. This is $840 over the $62,160 limit for that period. Their Social Security benefits would be reduced by $280, calculated as $1 for every $3 earned over the limit ($840 / 3). Once the beneficiary reaches their full retirement age in August, the earnings limit no longer applies, and they can receive their full benefit regardless of how much they earn.
Earnings After Full Retirement Age
Once a Social Security beneficiary reaches their full retirement age, the earnings limits that applied in previous years are removed. Individuals can earn any amount of income from work without their Social Security benefits being reduced or withheld. The Social Security Administration considers individuals “fully retired” at this point, even if they continue working. This policy allows beneficiaries to supplement their retirement income without penalty. Understanding one’s full retirement age is important, as it marks when the earnings test no longer impacts benefits.
What Counts as Earnings and How to Report Them
For the purpose of the Social Security retirement earnings test, only certain types of income count as “earnings.” These include wages from employment and net earnings from self-employment. Income sources that do not count towards the earnings limit include pensions, annuities, investment income (such as interest, dividends, or capital gains), and other government benefits. For employees, gross wages before deductions are counted. For self-employed individuals, it is the net profit from their business after allowable deductions.
Reporting earnings to the Social Security Administration varies by employment type. For most employees, earnings information is automatically reported to the SSA through W-2 forms, while self-employed individuals report earnings when filing annual tax returns, typically via Schedule SE. Beneficiaries who anticipate exceeding earnings limits, or whose earnings significantly change, should contact the SSA to report estimated earnings. The SSA may initially withhold benefits based on these estimates, then adjust payments once actual earnings are known. Keeping accurate records, such as pay stubs and tax documents, helps verify earnings if the SSA requests further information.