How Much Can I Earn While Collecting Social Security?

Receiving Social Security benefits provides financial support during retirement. Many individuals choose to continue working, which raises questions about how earnings affect these benefits. Understanding the rules surrounding working while collecting Social Security helps manage your retirement income. This article explains how earnings can impact Social Security benefits, detailing the limits and reporting requirements.

Understanding Full Retirement Age

Your Full Retirement Age (FRA) is the age at which you are eligible to receive your full, unreduced Social Security retirement benefits. This age varies based on your birth year. For individuals born in 1943 through 1954, the Full Retirement Age is 66.

The Full Retirement Age gradually increases for those born in later years. For instance, if you were born in 1955, your FRA is 66 and two months. For anyone born in 1960 or later, your Full Retirement Age is 67. Knowing your Full Retirement Age dictates how your earned income might affect your Social Security payments.

Earnings Limits Before Full Retirement Age

If you begin receiving Social Security benefits before reaching your Full Retirement Age and continue to work, your earnings are subject to limits. In 2024, the annual earnings limit for those under FRA is $22,320. If your earnings exceed this amount, the Social Security Administration (SSA) will reduce your benefits. $1 in benefits will be withheld for every $2 you earn above this annual limit.

A special rule applies for the first year you start receiving benefits while under your Full Retirement Age. In this initial year, a monthly earnings limit applies. This rule considers only earnings from the months you are receiving benefits, preventing earlier earnings from affecting them. For example, if you claim benefits mid-year, only earnings from that point forward are considered. If someone earns $25,000 in 2024 while under FRA, exceeding the $22,320 limit by $2,680, their benefits would be reduced by $1,340 ($2,680 / 2).

Earnings Limits in Your Full Retirement Age Year and Beyond

The rules for earnings limits change in the calendar year you reach your Full Retirement Age. During this year, a higher earnings limit applies before your birth month. In 2024, this higher limit is $59,520. The benefit reduction rule is also different: $1 in benefits will be withheld for every $3 you earn above this limit.

This reduction only applies to earnings in the months before your birth month in that year. Once you reach your Full Retirement Age, there are no longer any earnings limits. You can earn any amount of income from work without your Social Security benefits being reduced.

Defining Countable Earnings

Understanding what types of income Social Security considers “countable earnings” helps assess your situation against the earnings limits. Countable earnings include wages from an employer and net earnings from self-employment (profit from a business).

Many other types of income do not count towards these limits. This includes income from pensions, government or military retirement benefits, and annuities. Investment income (interest, dividends, capital gains) is not counted. Rental income is excluded unless from an active real estate business where you provide substantial services.

Reporting Earnings and Benefit Adjustments

Individuals receiving Social Security benefits who anticipate earning more than the limits must report their estimated earnings to the Social Security Administration (SSA). This can be done through your my Social Security online account, by phone, or at a local SSA office. Providing an accurate estimate helps the SSA manage your benefits.

If your actual earnings exceed the limit, the SSA will withhold your Social Security benefits until the amount withheld equals the reduction due to your earnings. If you do not report your earnings accurately or timely, you could receive an overpayment, which the SSA will seek to recover. Benefits withheld due to the earnings test are not permanently lost; they are factored into a recalculation when you reach your Full Retirement Age. This recalculation results in a higher monthly benefit amount, compensating for earlier reductions.