How Much Can I Earn at 65 Without Affecting Benefits?

Working past age 65 can bring financial benefits, but it also introduces complexities regarding various retirement benefits. Understanding how your earnings interact with programs like Social Security and Medicare is important for managing your financial well-being. Different types of income are treated uniquely across these programs, impacting how much you can earn before your benefits might be affected.

Social Security Earnings Limits

For individuals receiving Social Security retirement benefits before reaching their full retirement age (FRA), earnings limits affect their monthly payments. Full retirement age varies based on your birth year, typically ranging from 66 to 67 years old. If you are under your full retirement age for the entire year, the Social Security Administration (SSA) will deduct $1 from your benefits for every $2 you earn above a certain annual limit. In 2025, this annual earnings limit is $23,400.

A different, higher earnings limit applies in the year you reach your full retirement age. For 2025, this limit is $62,160. Only earnings accumulated in the months before you reach your full retirement age are counted towards this limit. The SSA will deduct $1 in benefits for every $3 earned above this higher limit.

Once you reach your full retirement age, the earnings limit no longer applies, meaning you can earn any amount without your Social Security benefits being reduced. Only “earned income,” which includes wages from employment or net earnings from self-employment, counts toward these limits. Other income sources like pensions, annuities, investment income, or interest do not affect these earnings limits. The SSA has a special rule for the first year you start receiving benefits, allowing full benefits for any month you are considered retired, regardless of yearly earnings, if monthly earnings fall below a specific threshold ($1,950 per month for those under FRA for the entire year in 2025, or $5,180 per month in the year FRA is reached).

Taxation of Social Security Benefits

Beyond earnings limits, a portion of your Social Security benefits may become subject to federal income tax depending on your total income, referred to as “provisional income.” Provisional income is calculated by adding your Adjusted Gross Income (AGI), any tax-exempt interest income, and one-half of your Social Security benefits.

For 2025, if your provisional income is between $25,000 and $34,000 for single filers, or between $32,000 and $44,000 for those married filing jointly, up to 50% of your Social Security benefits may be subject to federal income tax. If your provisional income exceeds $34,000 for single filers, or $44,000 for married couples filing jointly, up to 85% of your Social Security benefits may be taxed. This taxation applies regardless of whether your benefits were reduced by the Social Security earnings limit.

This tax rule considers both earned income (like wages) and unearned income (such as pensions, dividends, or interest) when calculating provisional income. It is possible to have your Social Security benefits taxed even if you are no longer subject to the earnings limit because you have reached your full retirement age. The IRS provides Worksheet A in Publication 915 to assist taxpayers in determining the taxable portion of their benefits.

Medicare Premium Adjustments

Higher income can also lead to increased Medicare Part B and Part D premiums through IRMAA. While most Medicare beneficiaries pay a standard Part B premium, individuals with higher Modified Adjusted Gross Income (MAGI) from two years prior pay an additional amount. For instance, your 2025 Medicare premiums are based on your 2023 MAGI.

For 2025, individuals with a 2023 MAGI above $106,000, or married couples filing jointly with a 2023 MAGI above $212,000, will incur an IRMAA surcharge. There are multiple tiers of increased premiums. IRMAA also applies to Medicare Part D prescription drug coverage premiums, with the same income thresholds as Part B.

The MAGI used for IRMAA calculations is typically your Adjusted Gross Income (AGI) plus tax-exempt interest income. This definition of MAGI is specific to Medicare and does not include untaxed Social Security benefits. IRMAA is based on a broader definition of income than just earned income.

Understanding Income for Retirement

The term “income” carries different meanings across various financial contexts, particularly when considering Social Security, taxation, and Medicare. Understanding these distinctions is important for effectively managing your finances in retirement.

For Social Security earnings limits, the focus is strictly on “earned income,” which encompasses wages from employment and net earnings from self-employment. This category specifically excludes passive income sources like pensions, annuities, investment dividends, or interest.

When determining the taxation of Social Security benefits, the relevant measure is “provisional income.” This calculation includes your Adjusted Gross Income (AGI), any tax-exempt interest, and half of your Social Security benefits. This broader definition means that income from investments, traditional IRA withdrawals, and other taxable sources all contribute to whether your Social Security benefits will be subject to federal income tax.

For Medicare Part B and Part D premium adjustments (IRMAA), the key figure is your “Modified Adjusted Gross Income” (MAGI). For Medicare purposes, MAGI is generally defined as your AGI plus tax-exempt interest income. This definition can capture income from various sources, including capital gains, dividends, and withdrawals from tax-deferred accounts, which can push you into a higher IRMAA bracket.