How Much Money Can You Make on Social Security?
Navigate Social Security earnings rules. Discover how working impacts your benefits and manage your retirement income effectively.
Social Security benefits provide a financial foundation for many individuals in retirement. However, if you choose to continue working while receiving these benefits, your earnings can influence the amount you receive. Understanding the rules surrounding Social Security and earned income is important for beneficiaries to manage their finances effectively. The Social Security Administration (SSA) has specific guidelines designed to balance work incentives with benefit payments, particularly for those who have not yet reached their full retirement age.
Understanding Social Security Earnings Limits
The Social Security Administration (SSA) imposes annual earnings limits for individuals who collect benefits before reaching their full retirement age (FRA). These limits are adjusted each year to account for changes in average wages. For 2025, if you are under your full retirement age for the entire year, the annual earnings limit is $23,400. If your earnings exceed this amount, a portion of your Social Security benefits will be withheld.
A different, higher earnings limit applies during the calendar year you reach your full retirement age. In 2025, this special limit is $62,160. Only earnings accumulated in the months before you reach your full retirement age are counted towards this limit. Any income earned from the month you attain your full retirement age onward does not count against this limit.
Once you reach your full retirement age, the earnings limit no longer applies, and you can earn any amount without it affecting your Social Security benefits. Your full retirement age is determined by your birth year; for instance, individuals born in 1960 or later have a full retirement age of 67.
Impact of Earnings on Your Benefits
Exceeding the Social Security earnings limits can lead to a reduction in your benefit payments. The amount withheld depends on whether you are under your full retirement age for the entire year or are in the year you reach your full retirement age. For beneficiaries who are under their full retirement age for the entire year, the Social Security Administration will deduct $1 from your benefits for every $2 you earn above the annual limit. For example, if you earn $24,400, which is $1,000 over the $23,400 limit in 2025, $500 would be withheld from your benefits.
For those in the year they reach full retirement age, a more lenient reduction formula applies. In this scenario, $1 in benefits is withheld for every $3 earned above the higher annual limit. This withholding only applies to earnings made prior to the month you reach your full retirement age. The benefits that are withheld are not permanently lost; instead, your primary insurance amount (PIA) may be recalculated at your full retirement age to account for these previously withheld amounts.
The Social Security Administration withholds entire checks until the overage is recovered. For example, if your total annual benefits are $12,000 and $2,000 needs to be withheld due to excess earnings, the SSA might withhold one or more of your monthly checks until that $2,000 is recouped. This adjustment can result in a higher monthly benefit amount for you in the future once you reach your full retirement age.
What Income Counts for Earnings Limits
When the Social Security Administration calculates earnings against the annual limits, only certain types of income are considered. The primary forms of income that count are wages earned from employment and net earnings from self-employment. This includes gross wages before deductions, as well as bonuses, commissions, and accrued vacation or sick pay. For self-employed individuals, the net profit from their business is the relevant figure.
It is equally important to understand what types of income do not count towards these earnings limits. Income from sources such as pensions, annuities, and investment earnings, including dividends, interest, and capital gains, are not considered. Other non-countable income includes government or military retirement pay and unemployment benefits. These exclusions mean that you can receive substantial income from these non-work sources without affecting your Social Security benefit payments, even if you are below your full retirement age.
Reporting Your Earnings to Social Security
Beneficiaries must accurately and timely report their earnings to the Social Security Administration (SSA). This reporting helps prevent overpayments, which can lead to repayment obligations, or underpayments. You should contact the SSA whenever you start or stop working, or if there is a change in your earnings.
Beneficiaries can report their estimated earnings and actual earnings through several methods. These options include reporting online through your personal “my Social Security” account, by telephone, or by visiting a local Social Security office. Prompt reporting ensures that your benefits are adjusted correctly according to your current income situation.