How Much Income Can You Earn While Collecting Social Security?

Social Security benefits provide financial support in retirement. Many individuals choose to continue working while receiving these benefits. Earning income can affect the amount of Social Security benefits received, particularly if you have not yet reached your full retirement age. The Social Security Administration (SSA) has specific rules and limits for this situation. Understanding these guidelines helps beneficiaries manage their finances and avoid unexpected adjustments.

Understanding Income Limits and Reductions

The amount of income you can earn while collecting Social Security benefits without a reduction depends on your age relative to your full retirement age (FRA). Your FRA is determined by your birth year, generally falling between age 66 and 67. Before reaching your FRA, specific annual earnings limits apply, and exceeding these limits can lead to a temporary reduction in your benefits.

For beneficiaries younger than their full retirement age for the entire year, the annual earnings limit for 2025 is $23,400. If your earned income exceeds this amount, the Social Security Administration will withhold $1 in benefits for every $2 earned over the limit. For example, if you are under your FRA for all of 2025 and earn $25,400, your Social Security benefits would be reduced by $1,000.

A different set of rules applies in the calendar year you reach your full retirement age. For 2025, the earnings limit for the year you reach FRA is $62,160. The SSA will withhold $1 in benefits for every $3 earned above this limit, but only earnings accumulated before the month you reach your FRA are counted. For instance, if you reach your FRA in August 2025 and earn $63,160 from January through July, your benefits would be reduced by approximately $333.

Once you attain your full retirement age, the earnings limit no longer applies. You can earn any amount of income without it affecting your Social Security benefit payments. Benefits withheld due to exceeding earnings limits before your FRA are not permanently lost. Instead, your monthly benefit amount will be recalculated at your full retirement age to account for those withheld funds, potentially increasing future payments. These income limits are adjusted annually by the Social Security Administration to reflect changes in average wages.

What Counts as Earned Income

Understanding what the Social Security Administration considers “earned income” is important for beneficiaries to correctly assess how their work affects their benefits. Earned income generally includes wages from employment and net earnings from self-employment. This encompasses compensation such as salaries, hourly wages, bonuses, commissions, and vacation pay.

Many other types of income do not count towards Social Security’s earnings limits. This includes income from pensions, annuities, and investment sources like dividends, interest, and capital gains from selling assets. Rental income also typically does not count, unless generated from an active real estate business where you provide substantial services. Government benefits, such as veterans’ benefits or other Social Security benefits, are not considered earned income. The SSA differentiates these income types because the earnings test assesses income from active work, not passive investments or other benefit programs.

Reporting Your Earnings

Beneficiaries must report their estimated annual earnings to the Social Security Administration. This helps the SSA determine the correct benefit amount and avoid overpayments or underpayments. It is important to report your estimated earnings at the beginning of the year, or promptly update your estimate if your actual earnings change significantly during the year.

You can report earnings to the SSA through several methods:
Using your My Social Security account online
Contacting the SSA by phone
Visiting a local SSA office
Sending information via mail

Keeping detailed records of your income, such as pay stubs and bank statements, is important to verify earnings if needed by the SSA. Failing to report earnings correctly or in a timely manner can lead to consequences, including withholding future benefits and requiring repayment of overpaid benefits. For example, a first violation could result in benefits being withheld for up to six months.