How Much Can You Earn While on Social Security?

Working while receiving Social Security benefits is a common practice for many individuals, yet it can introduce complexities regarding benefit amounts. Understanding the specific rules that govern how earned income impacts Social Security payments is important for financial planning. The Social Security Administration (SSA) has established clear guidelines on how much you can earn before your benefits are affected, which vary depending on your age relative to your full retirement age. These rules are designed to balance supporting beneficiaries with the program’s long-term sustainability.

What Income Counts for Social Security Earnings Limits

When the Social Security Administration assesses your earnings, it primarily focuses on “earned income.” This category includes wages from employment, such as salaries, bonuses, and commissions, as well as net earnings derived from self-employment. For employees, this refers to your gross earnings before any deductions like taxes or retirement contributions are taken out. For self-employed individuals, it is the net profit from your business activities.

It is important to distinguish this from other forms of income, which are not considered when applying the earnings test. Income sources that do not count against Social Security earnings limits include:

• Pensions
• Annuities
• Investment income such as interest, dividends, and capital gains
• Government retirement benefits
• Workers’ compensation
• Unemployment benefits

This distinction is crucial for beneficiaries to understand, as it allows them to manage their finances without unintentionally reducing their Social Security payments from non-work income.

Earnings Limits Before Full Retirement Age

For individuals receiving Social Security benefits who are under their full retirement age (FRA) for the entire year, a specific annual earnings limit applies. In 2025, this annual earnings limit is $23,400. If your earnings exceed this amount, your Social Security benefits will be reduced. The reduction formula dictates that for every $2 you earn above the limit, $1 in benefits will be withheld.

For example, if a beneficiary under FRA earns $25,400 in 2025, which is $2,000 over the limit, their Social Security benefits would be reduced by $1,000 ($2,000 / 2). Full retirement age generally ranges from 66 to 67, depending on your birth year.

Earnings Limits in the Year You Reach Full Retirement Age

A different, more generous earnings limit applies specifically in the calendar year you reach your full retirement age. In 2025, this higher earnings limit is $62,160. This limit, however, only applies to earnings received in the months before the month you actually reach your full retirement age. The benefit reduction formula for this period is also different: for every $3 earned over this limit, $1 in benefits is withheld.

For instance, if you reach your FRA in August 2025 and earn $63,000 between January and July, your earnings exceed the limit by $840 ($63,000 – $62,160). Your benefits would be reduced by $280 ($840 / 3) for the months before August.

Earning After Full Retirement Age

Once you reach your full retirement age, the Social Security earnings limits no longer apply. This means you can earn any amount of income from working without it affecting your monthly Social Security benefit payments. This is a significant milestone for beneficiaries who choose to continue working, as it removes the previous constraints on their earnings.

Any benefits that were withheld due to earning over the limits before you reached your full retirement age are not forfeited. Instead, the Social Security Administration recalculates your benefit amount at your full retirement age to account for those withheld payments. This adjustment typically results in a higher monthly benefit amount for the remainder of your life, effectively crediting you for the benefits that were initially reduced.

How Social Security Withholds Benefits

The Social Security Administration (SSA) implements a specific process for withholding benefits when earnings exceed the applicable limits. Typically, the SSA will withhold an entire month’s benefit check until the total amount of benefits withheld equals the amount required by the earnings test. Beneficiaries are expected to report their estimated earnings to the SSA to help facilitate this process accurately.

If your actual earnings differ from your initial estimates, the SSA will adjust future payments accordingly to correct any overpayments or underpayments. The SSA also conducts an annual review, comparing your reported earnings with records from the Internal Revenue Service (IRS) to ensure accuracy.