For millions of Americans, the combination of working and receiving Social Security benefits is a key part of their retirement strategy. Understanding the rules for how earnings affect your payments is critical for financial planning, especially knowing at what age can you work unlimited hours and collect Social Security.
Full Retirement Age (FRA): The Key to Unlimited Earnings
The age you can work and earn without limit is directly tied to your Full Retirement Age (FRA), a benchmark set by the Social Security Administration (SSA) based on your birth year. Once you reach your FRA, the SSA's 'earnings test' no longer applies, and you can earn any amount of income from working without it affecting your benefit amount. This is the key milestone for those who wish to work part-time, full-time, or start a new business without worrying about their benefits being reduced.
Your Full Retirement Age by Birth Year
For many years, the FRA was 65, but legislation passed in 1983 gradually increased it to account for longer life expectancies. The specific age depends on your birth year, with 67 being the FRA for anyone born in 1960 or later.
- Born 1943–1954: Your FRA is 66.
- Born 1955: Your FRA is 66 and 2 months.
- Born 1956: Your FRA is 66 and 4 months.
- Born 1957: Your FRA is 66 and 6 months.
- Born 1958: Your FRA is 66 and 8 months.
- Born 1959: Your FRA is 66 and 10 months.
- Born 1960 or later: Your FRA is 67.
The Earnings Test Before Your Full Retirement Age
If you claim Social Security benefits before reaching your FRA and continue to work, your income will be subject to the SSA's earnings test. This can lead to a temporary reduction of your benefits if your earnings exceed a certain limit. It's important to remember that these reductions are not permanent; the SSA will recalculate your benefit amount upward once you reach your FRA to give you credit for any withheld benefits.
How the Earnings Test Works
Here’s how the earnings limit impacts your benefits based on your age relative to your FRA:
- If you are under FRA for the entire year: For 2025, the annual earnings limit is $23,400. For every $2 you earn over this limit, $1 will be deducted from your Social Security benefits.
- If you reach FRA during the year: For 2025, the limit is $62,160 for the months before you reach your FRA. For every $3 you earn over this limit, $1 will be deducted from your benefits. Once you hit your birthday month, the earnings limit disappears, and you can earn any amount without penalty.
Comparison: Working Before vs. At Full Retirement Age
| Feature | Working Before Full Retirement Age (FRA) | Working At or After Full Retirement Age (FRA) |
|---|---|---|
| Earnings Limit | Yes, annual limit applies. For 2025, it's $23,400 for those under FRA for the entire year. | No, there is no limit on earnings. You can work unlimited hours and collect full benefits. |
| Benefit Reduction | Benefits are temporarily reduced if you earn over the limit ($1 for every $2 or $3, depending on the year). | No benefit reduction due to earnings, regardless of how much you make. |
| Benefit Recalculation | Withheld benefits are added back to your payment in the form of higher monthly checks once you reach FRA. | N/A, as no benefits are withheld due to earnings. |
| Benefit Amount | Claiming benefits early results in a permanently reduced monthly benefit. | Your monthly benefit is based on your full entitlement, with potential increases for delayed claiming. |
| Example | Earn $30,000 in 2025 while under FRA, and some benefits are withheld. | Earn $75,000 in 2025 after reaching FRA, and no benefits are withheld. |
Understanding What Counts as Earnings
When the SSA calculates your earnings for the purposes of the earnings test, they consider two types of income: wages from your job and net earnings from self-employment. This includes salary, bonuses, and commissions. Other forms of income do not count toward the limit, including pensions, annuities, investment income, interest, and government or military retirement benefits. This distinction is important for those who have other sources of income in addition to working.
The Strategic Advantage of Working After Your FRA
Working after your FRA offers two major financial advantages:
- Unlimited Earning Potential: As covered, there is no earnings test, giving you complete flexibility to work as much or as little as you desire without impacting your Social Security checks.
- Increased Future Benefits: Continuing to work can increase your future benefits by replacing lower-earning years in the 35-year average the SSA uses to calculate your payments. Additionally, delaying your claim beyond your FRA can result in Delayed Retirement Credits (DRCs), which increase your monthly benefit by up to 8% for each year you wait, up to age 70.
Conclusion
Ultimately, the ability to work unlimited hours and collect Social Security benefits is determined by your Full Retirement Age. For most people born in 1960 or later, this age is 67. Prior to this milestone, the Social Security Administration's earnings test places a limit on how much you can earn before your benefits are temporarily reduced. Understanding your specific FRA and the rules surrounding the earnings test is crucial for making informed decisions about when to retire, when to start collecting benefits, and whether to continue working. By planning accordingly, you can maximize your Social Security payments and align your work with your retirement goals.
For more detailed information, consult the official Social Security Administration website.
