How Much Money Can You Make Drawing Social Security?

Many individuals wonder about the financial implications of working while receiving Social Security benefits. Social Security provides income during retirement or disability, offering flexibility for those who wish to supplement their benefits with earned income. Understanding the specific rules regarding how much you can earn without affecting your payments is important for financial planning. This article explores the earning limits and tax considerations when working while receiving Social Security.

Understanding Social Security Earning Limits

Social Security earning limits are thresholds set by the Social Security Administration (SSA) that determine how much income a beneficiary can earn from work before benefits are temporarily reduced. These limits align the program’s intent of providing retirement or disability income with the ability of beneficiaries to maintain employment. The primary focus is on earned income, which includes wages or net earnings from self-employment.

Other income sources, such as pensions, investment returns, interest, or rental income, do not count towards these earning limits and do not impact Social Security benefits. If earned income exceeds the established limits, a portion of benefits may be withheld. This withholding is a temporary reduction, not a permanent loss of benefits.

Working Before Full Retirement Age

For individuals receiving Social Security benefits before reaching their full retirement age (FRA), specific earning limits apply. In 2025, if you are under your full retirement age for the entire year, the annual earning limit is $23,400. For every $2 earned above this limit, $1 will be withheld from your Social Security benefits. For example, if a beneficiary earns $25,400 in 2025, which is $2,000 over the limit, their Social Security benefits would be reduced by $1,000.

The earnings considered for this limit include gross wages or net profit from self-employment. It is important to accurately report your estimated earnings to the Social Security Administration.

A special “monthly earnings test” can apply in the first year you start receiving benefits if you begin mid-year. This rule allows beneficiaries to receive a full benefit for any month their earnings fall below a specific monthly threshold, regardless of their total annual earnings. In 2025, this monthly threshold is $1,950 for those under FRA.

Working During Your Full Retirement Age Year

A different set of earning limits and withholding rules applies in the calendar year you reach your full retirement age (FRA). In 2025, the annual earning limit for this period is $62,160. The benefit withholding rule also changes: for every $3 you earn above this limit, $1 will be withheld from your Social Security benefits.

This higher limit and withholding rule only apply to earnings accumulated before the month you actually reach your full retirement age. Once you attain your FRA month, the earning limit is removed entirely, and your benefits are no longer subject to reduction based on your earnings. For instance, if you reach FRA in August 2025 and earn $63,000 from January through July, your benefits would be reduced by $280.

Working At or After Full Retirement Age

Once you reach your full retirement age (FRA), Social Security earning limits no longer apply. You can earn any amount from work without your benefits being reduced or withheld. This means beneficiaries who continue working after their FRA will receive their full scheduled Social Security payment, regardless of their income level.

Any benefits previously withheld due to exceeding earning limits before your FRA are not permanently lost. The Social Security Administration automatically recalculates your benefit amount at your FRA through a process called the “Adjustment of the Reduction Factor” (ARF). This adjustment gives you credit for months in which benefits were withheld, resulting in a higher monthly benefit amount. Continuing to work after FRA can also increase your future Social Security benefits. If your current earnings are higher than some lower-earning years used in your initial benefit calculation, the SSA will substitute those higher earnings, leading to a larger monthly payment.

Taxation of Social Security Benefits

While earning limits determine if your Social Security benefits are reduced due to work, the taxation of those benefits is a separate consideration based on your total income. Social Security benefits can become taxable at the federal level depending on your “combined income,” calculated as your adjusted gross income (AGI), plus any nontaxable interest, plus one-half of your Social Security benefits. This means that even if no benefits are withheld due to earning limits, a portion can still be subject to income tax.

For 2025, if your combined income falls between $25,000 and $34,000 for individual filers, or between $32,000 and $44,000 for those filing jointly, up to 50% of your Social Security benefits may be subject to federal income tax. If your combined income exceeds $34,000 for individual filers or $44,000 for joint filers, up to 85% of your Social Security benefits may be taxable. Substantial income from other sources, including continued employment, pensions, or investments, can push your combined income above these thresholds. Some states also impose their own income taxes on Social Security benefits, though rules and exemptions vary. For personalized advice regarding your tax situation, consulting a qualified tax professional is recommended.