How Much Can You Make While on Social Security?
Explore the relationship between your earned income and Social Security benefits. Gain clarity on financial considerations while receiving payments.
It is possible to work while receiving Social Security benefits, though your earnings might affect the amount of benefits you receive. Understanding the rules set by the Social Security Administration (SSA) is important for individuals who plan to continue working during their retirement years. This guide clarifies how much you can earn and how earnings limits are applied to your Social Security payments.
Understanding Social Security Earnings Limits
The Social Security Administration imposes annual earnings limits on individuals who receive benefits and have not yet reached their full retirement age (FRA). The full retirement age varies depending on your birth year, generally falling between 66 and 67 years old. Once you reach your FRA, these earnings limits no longer apply, and you can earn any amount without it affecting your Social Security benefits.
For those who are under their full retirement age for the entire year, a specific annual earnings limit applies. In 2025, this limit is set at $23,400. If your earnings exceed this threshold, a portion of your Social Security benefits will be withheld.
A different, higher earnings limit applies in the calendar year you reach your full retirement age. For 2025, this limit is $62,160. However, for this specific year, only the earnings you make in the months before you reach your full retirement age are counted towards this limit.
These earnings limits are adjusted annually to account for changes in average wages. Therefore, it is advisable to consult the official Social Security Administration website or contact the SSA directly for the most current figures applicable to future years.
Income Subject to Limits
When the Social Security Administration calculates your earnings against the annual limits, only certain types of income are considered. The primary forms of income that count towards these limits are wages received from employment and net earnings from self-employment. This includes any gross wages you earn from a job. For self-employed individuals, the calculation is based on your net earnings, which is your business’s profit after deducting allowable business expenses.
Many other forms of income do not count against Social Security’s earnings limits. These include income from pensions, government benefits, annuities, investment income (such as interest, dividends, and capital gains), and distributions from retirement accounts like IRAs or 401(k) plans. Rental income is generally not counted unless it is derived from a trade or business that you actively manage. The focus of the earnings limits is specifically on income earned through current work activities, rather than passive income or distributions from savings and investments.
How Exceeding Limits Affects Benefits
If your earnings surpass the established limits before you reach your full retirement age, your Social Security benefits will be temporarily reduced. The amount of reduction depends on your age relative to your full retirement age. For individuals who are under their full retirement age for the entire year, the SSA will withhold $1 in benefits for every $2 you earn above the annual limit.
A different withholding rate applies in the year you reach your full retirement age. In this scenario, the SSA will deduct $1 in benefits for every $3 you earn above a higher annual limit. This particular reduction only applies to earnings made in the months leading up to your full retirement age.
A special rule exists for the first year you begin receiving Social Security benefits, particularly if you start mid-year. This “special rule” allows the Social Security Administration to apply a monthly earnings test instead of the annual test. Under this rule, you can receive a full Social Security check for any month in which your earnings fall below a specific monthly threshold, regardless of your total annual earnings. For 2025, if you are under full retirement age for the entire year, this monthly limit is $1,950, and if you reach full retirement age in 2025, the monthly limit for the months before your FRA is $5,180.
It is important to understand that benefits withheld due to exceeding earnings limits are not permanently lost. The Social Security Administration keeps track of these withheld amounts. Once you reach your full retirement age, your benefit amount is recalculated to account for the benefits that were previously withheld. This typically results in a higher monthly benefit amount in the future, effectively returning the withheld funds to you over time.
Reporting Your Earnings to the Social Security Administration
Accurately and timely reporting your earnings to the Social Security Administration is an important responsibility when you are receiving benefits. This ensures that your benefit payments are correctly adjusted according to the earnings limits and helps prevent overpayments, which you would otherwise have to repay.
You can report your earnings to the Social Security Administration through several methods. The SSA encourages beneficiaries to use their online “my Social Security” account for convenience, which allows for secure reporting and access to your benefit information. Alternatively, you can contact the SSA by phone, visit a local Social Security office in person, or submit earnings information by mail.
Maintaining thorough records of your employment income and net earnings from self-employment is advisable. This includes keeping copies of W-2 forms from employers and detailed records of your self-employment income and expenses. The Social Security Administration verifies reported earnings through information provided by employers on W-2 forms and through self-employment tax returns filed with the Internal Revenue Service. Consistent record-keeping helps in reconciling your reported earnings with the SSA’s records and can simplify any inquiries or adjustments that may arise.