How Much Can You Make and Still Draw Social Security?
Discover how your earnings interact with Social Security benefits. Learn the thresholds and processes to manage your income while receiving payments.
Many individuals continue working after starting Social Security retirement benefits. The Social Security Administration (SSA) has earnings limits for those who have not yet reached their full retirement age (FRA) while still earning income. These limits manage how earnings affect benefit payments. Understanding these regulations helps beneficiaries manage their finances and avoid unexpected adjustments.
Understanding the Social Security Earnings Limit
The Social Security earnings limit is an annual threshold set by the Social Security Administration (SSA). It determines how much income a beneficiary can earn from work before their Social Security benefits are temporarily reduced. This limit applies only to individuals receiving retirement benefits who have not yet reached their full retirement age (FRA). Once a beneficiary reaches their FRA, there is no longer any limit on how much they can earn, and benefits will not be reduced.
The specific earnings limit depends on a beneficiary’s age relative to their FRA. For those under their FRA for the entire year, a lower limit applies. In 2025, this limit is $23,400. If earnings exceed this, benefits are reduced.
A different, higher earnings limit applies in the year a beneficiary reaches their FRA. For 2025, this limit is $62,160. Only earnings accumulated in the months before reaching FRA count towards this higher limit. Once the month of FRA arrives, the earnings limit no longer applies, and beneficiaries can earn any amount without further reduction.
Full Retirement Age (FRA) dictates which earnings limit applies and when benefits are no longer subject to reduction. FRA is determined by an individual’s birth year, typically ranging from 66 to 67.
Defining Countable Earnings
When the Social Security Administration (SSA) applies the earnings limit, it considers only specific types of income. The primary categories of income that count towards the limit are wages from employment and net earnings from self-employment. Wages include gross pay from a job, encompassing salaries, commissions, bonuses, and severance pay. For self-employed individuals, countable income is the net profit from their business, calculated as gross income minus allowable business deductions.
Many other forms of income are specifically excluded from the earnings limit calculation. These non-countable sources include pensions, annuities, and withdrawals from retirement accounts such as 401(k)s, 403(b)s, and IRAs. Investment income, such as dividends, interest, and capital gains from the sale of assets, also does not count against the limit.
Additionally, government or military retirement pay, rental income (unless it’s from an active real estate business), and other passive income sources are not counted. Social Security benefits themselves are not factored into the earnings limit test. Income earned before a person started receiving Social Security benefits or after they reached their full retirement age is also not considered.
Impact on Your Social Security Benefits
If a beneficiary’s earnings exceed the applicable limit, their Social Security benefits will be reduced. The amount of reduction depends on their age relative to their full retirement age (FRA) and the specific earnings limit that applies.
For beneficiaries under their FRA for the entire year, the Social Security Administration (SSA) deducts $1 from benefits for every $2 earned above the annual limit. For example, if a beneficiary earns $1,600 over the limit, $800 will be withheld.
A different reduction rate applies in the year a beneficiary reaches their FRA. The SSA deducts $1 from benefits for every $3 earned above the higher limit, but only for earnings accrued before the month of their FRA. Any earnings from the month of or after reaching FRA do not result in a benefit reduction. The SSA typically withholds entire monthly payments until the total amount of excess earnings is accounted for.
Benefits withheld due to the earnings limit are not permanently lost. When the beneficiary reaches their FRA, the SSA recalculates their monthly benefit amount. This recalculation accounts for months in which benefits were withheld, increasing their future monthly benefit for the remainder of their life. This adjustment ensures beneficiaries eventually receive the value of their earned benefits.
Reporting Earnings to Social Security
Accurately reporting earnings to the Social Security Administration (SSA) is important for beneficiaries receiving benefits before their full retirement age. When applying for benefits, individuals should provide estimated earnings for the current year. If income changes, or annually if they continue to work below their full retirement age, they should update these estimates with the SSA. Prompt reporting helps prevent overpayments or underpayments.
Beneficiaries can report earnings by contacting the SSA by phone, using their online “my Social Security” account, sending information via mail or fax, or visiting a local Social Security office. Keep records of all communications and confirmations of reported earnings.
If a beneficiary overestimates earnings, the SSA may have withheld more benefits than necessary. The SSA will adjust future payments or issue a lump sum to compensate. Conversely, if earnings are underestimated, it can lead to an overpayment of benefits, which the beneficiary must repay. The SSA conducts an annual review, comparing reported earnings with W-2 forms and self-employment tax returns to ensure accuracy and make adjustments.