How Much Can I Earn on Social Security?

Individuals receiving Social Security retirement benefits who are still working may encounter earning limits that can affect their monthly payments. These rules are in place for beneficiaries who have not yet reached their Full Retirement Age (FRA). Understanding how earned income interacts with Social Security benefits is important to avoid unexpected reductions in payments. The Social Security Administration (SSA) has specific guidelines regarding how much can be earned before benefits are impacted, and these guidelines vary based on age.

Understanding Social Security Earning Limits

Social Security earning limits apply exclusively to individuals who are receiving benefits and are below their Full Retirement Age (FRA). Once a beneficiary reaches their FRA, these earning limits no longer apply, allowing them to earn any amount of income without affecting their Social Security benefits. The specific earning limits are adjusted annually by the Social Security Administration.

For the year 2025, if an individual will be under their FRA for the entire year, the annual earning limit is $23,400. If earnings exceed this amount, the Social Security Administration will withhold $1 in benefits for every $2 earned above the limit. This means that a portion of the benefits will be temporarily reduced.

A different, higher earning limit applies for individuals who reach their FRA during the year. In 2025, this limit is $62,160, and it applies only to earnings in the months before the month the beneficiary reaches their FRA. For earnings above this limit in those months, the SSA withholds $1 in benefits for every $3 earned. Once the month of FRA arrives, the earnings test ceases to apply, and benefits are no longer subject to reduction regardless of income.

“Earnings” for Social Security purposes include wages from employment, such as hourly pay, salaries, bonuses, commissions, and vacation pay. Net earnings from self-employment also count towards these limits. However, not all income is considered for these limits. Income sources like pensions, annuities, investment income (including interest, dividends, and capital gains), veterans’ benefits, other government or military retirement benefits, and IRA distributions do not count against the Social Security earnings test.

How Exceeding Limits Affects Your Benefits

When a beneficiary’s earnings surpass the established limits, the Social Security Administration implements a withholding process to reduce benefits. The specific withholding rates depend on whether the individual is under Full Retirement Age for the entire year or reaches FRA during the year, applying only to earnings prior to the FRA month.

These withheld benefits are not permanently lost. Instead, they are generally factored back into the benefit calculation once the individual reaches their Full Retirement Age through a process known as “recomputation of benefits.” This adjustment typically increases the future monthly benefit amount to account for the benefits that were previously withheld. The recomputation process occurs automatically, usually after the SSA receives updated earnings information from tax documents.

The earnings limits can affect various types of Social Security benefits, including retirement benefits, survivor benefits, and spousal benefits. All these benefit types are subject to the same earnings test if the recipient is below their Full Retirement Age.

A special provision known as the “grace year rule” applies in the first year an individual begins receiving benefits. This rule allows for a full Social Security check for any month in which the beneficiary’s earnings fall below a specific monthly threshold, regardless of their total annual earnings for that year. For 2025, if you are under FRA all year, this monthly limit is $1,950; if you reach FRA during the year, the monthly limit for months before FRA is $5,180. This rule is particularly beneficial for those who retire mid-year, preventing their pre-retirement earnings from immediately impacting their initial benefits.

Reporting Your Earnings to Social Security

Accurately reporting earnings to the Social Security Administration (SSA) is a necessary responsibility for beneficiaries who are working while receiving benefits. This reporting helps ensure that benefits are calculated correctly and helps prevent overpayments or underpayments. Beneficiaries should report changes in their earnings, or when they start or stop working.

While specific reporting frequencies can vary, generally, changes in income should be reported promptly, often by the 10th day of the month following the month of the change. Some programs, like Supplemental Security Income (SSI), may require monthly wage reporting by the 6th day of the month. For Social Security Disability Insurance (SSDI) beneficiaries, wages can be reported at any time up to 24 months after they are earned.

There are several convenient methods for reporting earnings. Beneficiaries can report online through their “my Social Security” account, by phone, through mail, or in person at a local SSA office. Maintaining detailed records, such as pay stubs and bank statements, is important to verify reported earnings if needed in the future.

Failing to report earnings or under-reporting them can lead to significant consequences. The SSA may require repayment of any overpaid benefits, which can accumulate to substantial amounts. Additionally, the SSA can impose sanctions, such as withholding future benefits for several months, with penalties ranging from six months for a first violation up to 24 months for repeated failures to report. In severe cases where intentional deception is found, it could lead to monetary penalties and even criminal charges for Social Security fraud.

Earning Rules at Full Retirement Age

A significant change occurs regarding earning rules once a beneficiary reaches their Full Retirement Age (FRA). At this point, the Social Security earnings test is no longer applicable. This means individuals can earn any amount of income from work without it affecting their Social Security benefit payments.

An individual’s Full Retirement Age is determined by their birth year. For those born in 1960 or later, FRA is age 67. For birth years between 1943 and 1959, the FRA gradually increases from 66 to 67. For instance, if born in 1958, your FRA is 66 and eight months.