Most Americans wonder whether you can still work while receiving Social Security benefits. The good news is that yes, you can, but there are significant income limits and provisions that you should know about to avoid unforeseen cuts in benefits. Understanding these limits may enable you to make good choices regarding your retirement and working.
Knowing the basic rules
The Social Security Administration permits you to work while receiving retirement benefits, but how it impacts your benefits varies based on your income and age. The determining factor is your full retirement age (FRA), which depends upon the year you were born and ranges from 66 to 67 years old. Full retirement age is 67 for those born in 1960 or later.
Annual earnings limits for 2025
For 2025, if you haven’t yet reached full retirement age, you can earn up to $23,400 during the year without a reduction in your Social Security benefits. That’s about $1,950 a month. If you earn more than that, Social Security will take out $1 in benefits for each $2 over the limit that you earn.
For example, if you earn $25,000 in 2025 ($1,600 above the limit), Social Security would withhold $800 from your annual benefits.
The limit on earnings is much greater if you attain full retirement age at some point in 2025. You can earn as much as $62,160 between January and the month that you attain FRA without facing loss of benefits. Only earnings up to the month you turn full retirement age are considered toward the limit.
If you earn more than $62,160, Social Security deducts $1 for each $3 you earn over the threshold, but only for months prior to you becoming FRA.
After reaching full retirement age, there are no limits on how much you can earn. You may work and earn as much as you wish without a reduction in your Social Security benefits.
What income counts toward the earnings test
Not all wages are counted when determining your Social Security benefits. Only the following wages and earnings are counted:
- Wages from employment (vacation pay, bonuses, and commissions)
- Net earnings from self-employment
- Cash tips of $20 or more a month
The following income is not counted:
- Pensions and annuities
- Investment income and interest
- Veterans or other government pensions or benefits
- Capital gains
The special monthly rule for first-year retirees
If you’re retiring half-way through the year, the Social Security Administration has a special rule that may allow you to get benefits even if your yearly income is more than the limit. Under this rule, you’ll be deemed “retired” during any month you earn $1,950 or less (if under FRA) or $5,180 or less (if turning FRA in 2025), after ignoring your total yearly earnings.
This rule usually only covers your first year of retirement and shields people with high income levels prior to retiring half-way through the year.
How held-back benefits are treated
Nearly everyone fears that their held-back benefits are gone forever, but they’re not. Once you have reached your full retirement age, Social Security recalculates the amount of your monthly benefit so that held-back benefits are covered.
The adjustment goes into effect by assuming your benefit if you had claimed later than you really did. For instance, if benefits were withheld from you for 12 months, Social Security would compute your benefit as if you had claimed it a year later, and you would receive an increased monthly payment for the rest of your life.
Other considerations
Employing while receiving Social Security actually boosts your own future benefits. The Social Security Administration recalculate earnings records every year, and if last year’s work was one of your top 35 years in terms of earnings, your benefit will be increased.
It’s required to report changes in earnings expected to Social Security to prevent overpayments, which you’d have to repay. Dependants who receive benefits from your employment history may also have their benefits decrease if you earn more than the earnings limits.
Read more: These are the 41 states that do not tax Social Security benefits
