How Much Can You Earn and Draw Social Security?

Social Security benefits offer financial support based on a worker’s lifetime earnings. However, working while receiving benefits can impact the amount received. Understanding the rules surrounding earnings limits and their effect on benefits is important for financial planning. This article explains current earnings limits, how benefits may be reduced, and what types of income are considered.

Social Security Earnings Limits Before Full Retirement Age

For individuals who begin receiving Social Security retirement benefits before reaching their full retirement age (FRA), annual earnings limits apply. If your income from work exceeds this limit, a portion of your benefits will be withheld. In 2025, if you are under your full retirement age for the entire year, the annual earnings limit is $23,400. For every dollar earned above this threshold, Social Security will deduct $1 from your benefits for every $2 earned.

A special “monthly earnings test” applies in the first year you receive benefits, even if annual earnings exceed the limit. This rule allows Social Security to pay full benefits for any month you are considered “retired,” regardless of total yearly earnings. In 2025, if you are younger than full retirement age, you are retired in any month your earnings are $1,950 or less. This test can only be applied once.

Impact of Exceeding Earnings Limits

When your earnings surpass the established limits before your full retirement age, your Social Security benefits are temporarily reduced, not permanently lost. For example, if you are under FRA all year in 2025 and earn $30,000, which is $6,600 over the $23,400 limit, your benefits would be reduced by $3,300 ($6,600 / 2).

The Social Security Administration withholds benefits until the excess earnings are accounted for. This means your monthly benefit payments will be stopped or reduced until the total amount withheld equals the calculated reduction. Once you reach your full retirement age, the Social Security Administration recalculates your benefit amount, taking into account the benefits that were previously withheld. This adjustment typically results in a higher monthly benefit amount for the remainder of your life, effectively restoring the value of the withheld benefits.

Earnings Limits in the Year of Full Retirement Age and Beyond

The rules for earning income change significantly as you approach and reach your full retirement age (FRA). Your FRA depends on your birth year. For individuals born between 1943 and 1954, FRA is 66. For those born in 1960 or later, FRA is 67. For birth years between 1955 and 1959, the FRA gradually increases by a few months each year, ranging from 66 years and two months to 66 years and ten months.

In the calendar year you reach your full retirement age, a higher earnings limit applies for the months before your FRA birthday. In 2025, this higher limit is $62,160. For earnings above this amount in the months leading up to your FRA, Social Security will deduct $1 from your benefits for every $3 earned. Once you reach your full retirement age, there are no longer any earnings limits. You can earn any amount of income without your Social Security benefits being reduced.

Defining Countable Earnings

For the purpose of Social Security’s earnings limits, only certain types of income are considered “countable earnings.” This primarily includes wages from employment and net earnings from self-employment. Wages are counted when they are earned, not when they are paid, while net earnings from self-employment are counted when received. Gross wages, before any deductions for taxes, insurance, or retirement contributions, are used in these calculations.

Many other forms of income are explicitly excluded from the earnings test and do not affect your Social Security benefits. These non-countable types of income include pensions, annuities, and various forms of investment income such as interest, dividends, and capital gains. Other government benefits, including Veterans Benefits or Supplemental Security Income (SSI), are also not counted against the earnings limits. Additionally, rental income, unless it is derived from an active business, is not considered countable earnings for this purpose.