How Much Money Can I Make After Full Retirement Age?

Social Security benefits provide a financial foundation for many individuals in their retirement years. Understanding how earned income interacts with Social Security is important, especially concerning Full Retirement Age (FRA).

Understanding Social Security Earnings Limits

Full Retirement Age (FRA) is a specific age set by the Social Security Administration (SSA) at which an individual can receive their full, unreduced retirement benefits. This age varies depending on your birth year; for those born in 1960 or later, FRA is 67. If you begin receiving Social Security benefits before reaching your FRA, your earnings may be subject to certain limits. These earnings limits apply annually and can lead to a temporary reduction in your benefits.

Once an individual reaches their Full Retirement Age, these earnings limits no longer apply. Only specific types of income count as “earnings” for Social Security purposes, including wages from employment and net earnings from self-employment. These are the only forms of income that can lead to benefit reductions if you are below FRA.

Conversely, many other forms of income do not count against Social Security earnings limits. These non-countable income sources include pensions, annuities, investment income like dividends and interest, capital gains, and government or military retirement pay. Distributions from IRAs and other retirement accounts also do not affect your Social Security benefits. This distinction is important for financial planning, allowing retirees to draw from various income streams without impacting their Social Security checks once they reach FRA.

Navigating Earnings Limits Before Full Retirement Age

For individuals who claim Social Security benefits before reaching their Full Retirement Age (FRA), specific earnings limits apply. If you are younger than FRA for the entire year, the Social Security Administration will deduct $1 from your benefits for every $2 you earn above a specific annual limit. For example, in 2024, this limit was $22,320, increasing to $23,400 in 2025. Your total earnings for the entire year are considered when determining this reduction.

In the calendar year you reach your FRA, a different, higher earnings limit applies. In 2024, this limit was $59,520, rising to $62,160 in 2025. During this year, the SSA will deduct $1 from your benefits for every $3 you earn above this limit, but only earnings up to the month you reach your FRA are counted. Earnings in or after the month you reach FRA are not subject to any reduction. Any benefits withheld due to exceeding the earnings limits before FRA are not permanently lost; your monthly benefit will be recalculated at your FRA to account for the months benefits were withheld.

Maximizing Your Social Security Benefits Through Post-FRA Work

Continuing to work after reaching your Full Retirement Age (FRA) presents opportunities to increase your future Social Security benefits. One significant way to maximize benefits through post-FRA work is by earning Delayed Retirement Credits (DRCs). For each month you delay claiming benefits past your FRA, up to age 70, your monthly benefit amount increases. For those born in 1943 or later, this increase is 8% for each full year of delay. For instance, delaying benefits from FRA (e.g., age 67) until age 70 can result in a 24% increase in your monthly payment.

Additionally, continued work can lead to a recalculation of your Social Security benefit amount. Your benefit is calculated based on your highest 35 years of indexed earnings. If your current earnings are higher than some of your past lower-earning years, working longer can replace those lower years in your earnings record, potentially increasing your Average Indexed Monthly Earnings (AIME) and, consequently, your primary insurance amount. This recalculation can result in a higher monthly benefit for the remainder of your retirement.

Reporting Your Earnings to the Social Security Administration

Individuals receiving Social Security benefits, especially those who are not yet at their Full Retirement Age (FRA), must accurately report their earnings to the Social Security Administration (SSA). This reporting is important to ensure proper benefit payment and to prevent overpayments or underpayments. You should report changes in your work activity, such as starting or stopping work, or significant changes in your earnings.

The SSA provides several methods for reporting earnings. You can report wages online through your my Social Security account, by phone, mail, or in person at a local Social Security office. While specific reporting frequency can vary, it is generally advised to report changes as soon as they occur.

Timely and accurate reporting is crucial to avoid potential issues. If you are overpaid due to unreported or underreported earnings, the SSA will typically seek to recover the overpaid amount. This can involve withholding a portion of your future benefits, and in some cases, the SSA may withhold a significant percentage of your monthly check to recover the overpayment. It is therefore important to maintain clear records of your earnings and communications with the SSA.