Receiving Social Security retirement or survivors benefits while working is possible. However, understanding the earning limits is crucial to avoid benefit reductions. This guide clarifies how much you can earn and still receive your full Social Security benefits.
When you receive Social Security benefits and continue to work, the Social Security Administration (SSA) reviews your earnings each year. If your latest year’s earnings are among your highest, the SSA recalculates your benefit, potentially increasing your payments retroactively to January of the following year. For survivors benefits recipients, this can lead to a higher retirement benefit than the current survivors benefit.
Understanding the Earnings Test and Benefit Reductions
While receiving Social Security retirement or survivors benefits, you are considered retired by the SSA, even if you are still working. You can receive benefits while working, but earning above a certain limit can result in a reduction of your benefit amount if you are younger than full retirement age.
For those under full retirement age for the entire year, the SSA deducts $1 from your benefit payments for every $2 earned above the annual limit. In 2025, this limit is $23,400.
In the year you reach full retirement age, the deduction changes to $1 for every $3 earned above a different limit. For 2025, this limit is $62,160. The SSA only considers earnings up to the month before you reach your full retirement age, not the entire year’s earnings.
If your earnings exceed the limit and you receive retirement benefits for part of the year, a special rule may apply. This rule allows you to receive a full Social Security benefit for any whole month you are considered retired, regardless of your yearly earnings.
If you receive survivors benefits, the SSA uses your full retirement age for retirement benefits when applying the annual earnings test (AET). This applies even if you are not entitled to retirement benefits.
Earnings Deductions: A Closer Look
In 2025, the annual earnings limit is $23,400 if you are under full retirement age. If you reach full retirement age in 2025, the limit on your earnings for the months before full retirement age is $62,160. Starting the month you reach full retirement age, there is no limit to how much you can earn while still receiving your benefits.
Let’s illustrate this with a couple of scenarios:
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Scenario 1: Under Full Retirement Age All Year
You receive $800 per month in Social Security benefits (totaling $9,600 for the year) and earn $32,320, which is $8,920 above the $23,400 limit. Your Social Security benefits would be reduced by $4,460 ($1 for every $2 earned above the limit). Consequently, you would receive $5,140 of your $9,600 in benefits for the year ($9,600 – $4,460 = $5,140).
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Scenario 2: Reaching Full Retirement Age in August 2025
You are entitled to $800 per month in benefits (totaling $9,600 for the year) and earn $69,000 during the year, with $63,000 earned from January through July (which is $840 more than the $62,160 limit). Your Social Security benefits would be reduced through July by $280 ($1 for every $3 earned more than the limit). You would receive $5,320 out of your $5,600 benefits for the first 7 months ($5,600 – $280 = $5,320). Beginning in August 2025, when you reach full retirement age, you would receive your full benefit ($800 per month), regardless of your earnings.
What Counts as Earnings?
When calculating deductions from your benefits, the SSA only considers wages from your job or net profit from self-employment. This includes bonuses, commissions, and vacation pay.
The SSA does not count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.
Reaching Full Retirement Age: A Game Changer
Upon reaching full retirement age, several significant changes occur:
- Your earnings will no longer reduce your benefits, regardless of how much you earn.
- The SSA will recalculate your benefit amount to credit you for months when benefits were reduced or withheld due to excess earnings.
Planning Your Earnings and Benefits
Understanding these rules is crucial for planning your earnings and maximizing your Social Security benefits. If you are eligible for retirement benefits and still working, consider using the SSA’s earnings test calculator to estimate how your earnings might affect your benefit payments. By carefully managing your income, you can ensure you receive the maximum benefits possible while enjoying your retirement.
