Understanding the interplay between your earnings and Social Security benefits is crucial for retirement planning. Many people wonder, “How Much Can I Earn And Still Receive Social Security?” This guide breaks down the earnings limits and rules that apply to Social Security retirement and survivors benefits. Working while receiving these benefits is possible, and in some cases, can even increase your future benefit amount.
Working While Receiving Social Security: The Basics
You can indeed work while receiving Social Security retirement or survivors benefits. The Social Security Administration (SSA) reviews beneficiary records annually, and if your latest year of earnings is among your highest, they recalculate your benefit, potentially increasing your monthly payments. This increase is applied retroactively to January of the year following the earnings. Furthermore, for those receiving survivors benefits, additional earnings can potentially lead to a higher retirement benefit than the current survivors benefit.
Earnings Limits and Benefit Reduction
While you can work and receive benefits, there are earning limits that can affect the amount of your monthly payments. If you are younger than your full retirement age, exceeding the annual earnings limit results in a reduction of your benefit amount.
- Under Full Retirement Age: In 2025, if you are under full retirement age for the entire year, $1 is deducted from your benefit for every $2 you earn above the annual limit of $23,400.
- Reaching Full Retirement Age in 2025: The rules are slightly different in the year you reach full retirement age. In 2025, the limit on your earnings is $62,160. For every $3 you earn above this limit, $1 is deducted from your benefits. However, only earnings up to the month before you reach full retirement age are considered. Earnings after that month do not affect your benefits.
The Special Earnings Rule
There’s a special rule for the first year you receive retirement benefits. This rule allows you to receive a full Social Security benefit for any whole month you’re considered retired, regardless of your yearly earnings. This is particularly helpful if you work for part of the year and then retire.
Earnings Test and Survivors Benefits
If you receive survivors benefits, the SSA uses your full retirement age for retirement benefits when applying the annual earnings test (AET), even if the full retirement age for survivors benefits is earlier. This means that the same earnings limits apply, ensuring consistency across benefit types.
Full Retirement Age: No More Earnings Limits
Once you reach full retirement age, the earnings limits disappear entirely. Beginning with the month you reach that age:
- 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.
Examples of How Earnings Affect Benefits
Let’s illustrate with a few examples, assuming you receive Social Security retirement benefits every month in 2025:
- Scenario 1: Under Full Retirement Age All Year
- You’re entitled to $800 per month ($9,600 annually).
- You earn $32,320 during the year, 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).
- You would receive $5,140 of your $9,600 in benefits for the year ($9,600 – $4,460 = $5,140).
- Scenario 2: Reaching Full Retirement Age in August 2025
- You’re entitled to $800 per month ($9,600 annually).
- You earn $69,000 during the year, with $63,000 earned from January through July (7 months). This is $840 more than the $62,160 limit.
- Your Social Security benefits would be reduced through July by $280 ($1 for every $3 earned above 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 receive your full $800 per month benefit, no matter how much you earn.
What Earnings Count?
When the SSA calculates deductions from your benefits, they count only the wages you make from your job or your net profit if you’re self-employed. This includes bonuses, commissions, and vacation pay. Pensions, annuities, investment income, interest, veterans benefits, and other government or military retirement benefits are not counted.
Resources and Further Information
For those eligible for retirement benefits and still working, the SSA provides an earnings test calculator to estimate how earnings could affect benefit payments.
Working while receiving Social Security benefits can be a complex issue. Understanding the earnings limits, the special rule, and how your age affects the calculation is crucial for maximizing your benefits. Don’t hesitate to use the SSA’s resources to plan effectively.
