How Much Can You Make Without Affecting Social Security?

Navigating Social Security benefits while continuing to work requires an understanding of specific regulations governing earned income. Individuals receiving Social Security payments may find their benefit amounts adjusted if their earnings exceed certain thresholds. The Social Security Administration (SSA) implements an “earnings test” to determine if and how much benefits are affected by employment income. This framework ensures that benefits are distributed in accordance with program rules, particularly for those who have not yet reached their full retirement age.

Earnings Limits Before Full Retirement Age

Individuals who begin receiving Social Security retirement benefits before reaching their full retirement age (FRA) are subject to annual earnings limits. For 2024, the earnings limit is $22,320, and for 2025, it is $23,400. If earnings surpass this amount, the SSA will withhold $1 in benefits for every $2 earned over the limit, temporarily reducing benefits.

Full Retirement Age (FRA) is the age at which an individual can receive their unreduced Social Security retirement benefits. This age varies depending on the individual’s birth year. For those born between 1943 and 1954, FRA is 66, while for individuals born in 1960 or later, it is 67. For birth years between 1955 and 1959, the FRA falls between 66 and 67 years, increasing by a few months each year.

The benefits withheld due to exceeding the earnings limit before FRA are not permanently lost. Once an individual reaches their full retirement age, the SSA recalculates their monthly benefit amount to account for the previously withheld payments. This adjustment results in a higher monthly benefit for the remainder of their life. The earnings test applies to retirement, spousal, and widow(er)’s benefits.

Earnings Limits at Full Retirement Age and Beyond

A different earnings limit applies in the year an individual reaches their full retirement age (FRA). For 2024, the earnings limit for the months leading up to the FRA is $59,520, increasing to $62,160 for 2025. In this specific year, the Social Security Administration withholds $1 in benefits for every $3 earned above this higher limit. Only earnings accumulated in the months before the month of reaching FRA count towards this limit.

Once an individual attains their full retirement age, earnings limits are no longer applicable. Beneficiaries can earn any amount of income from work without their Social Security benefits being reduced. The earnings test manages benefit payments for those actively working before their designated retirement age, allowing full earned benefits without income restrictions after FRA.

What Counts as Earnings for Social Security

For the Social Security earnings test, “earnings” means income derived from work. This includes gross wages from employment, such as salaries, hourly wages, commissions, bonuses, and severance pay. If self-employed, net earnings from self-employment are considered (gross income minus allowable deductions). The SSA counts net earnings when received, not necessarily when earned.

Many types of income are excluded from the Social Security earnings test. These non-countable sources include retirement income from pensions, 401(k)s, 403(b)s, and similar retirement plans. Investment income, such as dividends, interest, and capital gains, is excluded. Government benefits like Veterans Affairs (VA) benefits, Supplemental Security Income (SSI), and other government retirement benefits are also excluded.

Reporting Your Earnings

Accurate and timely reporting of earnings to the Social Security Administration (SSA) is important for correct benefit payments and preventing overpayments. Beneficiaries should report changes in work activity, including starting or stopping work, or any adjustments to hours or pay. This proactive reporting helps the SSA manage benefit adjustments.

Individuals can report earnings through several methods. Online reporting is available via a “my Social Security” account for updating earnings information. Beneficiaries can report by phone or by visiting a local Social Security office. Maintain records, such as pay stubs and bank statements, to verify reported earnings. The SSA uses information like W-2 forms from employers and self-employment tax returns to verify reported earnings.