The Social Security Earnings Test Explained
The Social Security Administration (SSA) applies an "earnings test" to beneficiaries who haven't reached their full retirement age (FRA). For a 64-year-old, the FRA depends on their birth year, being 67 for those born in 1960 or later. This test affects how much you can earn while receiving benefits.
There are different earnings limits based on whether you will reach your FRA within the year:
- If you are under FRA for the entire year: In 2025, the annual earnings limit is $23,400. Benefits are reduced by \$1 for every \$2 earned over this amount.
- If you reach FRA during the year: In 2025, a higher limit of $62,160 applies to earnings before the month you reach FRA. Benefits are reduced by \$1 for every \$3 earned over this limit.
How Your Benefits Are Affected and Recalculated
Any benefits withheld due to exceeding the earnings limit are not permanently lost. The SSA keeps track of withheld benefits and recalculates your monthly payment at your full retirement age to credit you for those amounts. This results in a permanent increase to your future monthly benefit.
What Counts as Earned Income?
The earnings test only applies to earned income like wages or self-employment income. It does not include other income sources such as pensions, investments, or annuities.
Example of the Earnings Test at Age 64
Consider a 64-year-old in 2025 receiving an estimated annual benefit of \$18,000 (\$1,500/month) who expects to earn \$35,000. With the 2025 limit at \$23,400, earnings exceed the limit by \$11,600. The SSA will deduct \$1 for every \$2 over the limit, resulting in a \$5,800 reduction in benefits for the year (\$11,600 / 2). This deduction will temporarily reduce payments until the \$5,800 is withheld. This reduction is temporary, and your payments will be adjusted upwards once you reach your full retirement age.
Making the Right Decision for You
Deciding when to start Social Security involves weighing immediate needs against future benefits. Here's a comparison:
| Feature | Collecting Benefits at Age 64 While Working | Delaying Benefits Until Full Retirement Age | Delaying Benefits Past Full Retirement Age (until age 70) |
|---|---|---|---|
| Benefit Amount | Permanently reduced monthly benefit, which is later increased to account for withheld payments. | Receive 100% of your primary insurance amount (PIA). | Monthly benefit increases by 8% for each year you delay, up to age 70. |
| Effect of Earnings | Subject to the Social Security earnings limit, potentially leading to temporarily withheld benefits. | No earnings limit; you can earn any amount without affecting your benefit. | No earnings limit; you can earn any amount without affecting your benefit. |
| Benefit Recalculation | Benefit is recalculated at full retirement age to account for withheld payments, resulting in a higher monthly amount. | Potential for a higher benefit if your current earnings replace a lower-earning year from your past. | Potential for a higher benefit if your current earnings replace a lower-earning year from your past. |
| Risk | Lower monthly payments for the rest of your life, though partially offset by the recalculation. | Possible missed income if you have a shorter life expectancy. | Highest monthly payments, but you forgo years of benefits while waiting. |
How to Apply for Social Security
Applying for Social Security benefits at age 64 can be done online, by phone, or in person. The official SSA website is www.ssa.gov.
- Online: Apply through the official SSA website by creating a
my Social Securityaccount. - By Phone: Call the SSA's national toll-free number at 1-800-772-1213.
- In-person: Visit a local Social Security office; calling ahead for an appointment is recommended.
Conclusion
Working while collecting Social Security at age 64 is possible, but subject to the annual earnings limit. Exceeding this limit results in temporary withholding of benefits, which are later credited back as higher monthly payments at your full retirement age. The decision to claim benefits early depends on individual financial circumstances and future income needs.
Disclaimer
This article provides general information about Social Security rules and is not financial or legal advice. Regulations can change, and the specific impact of working while collecting benefits depends on individual circumstances. For personalized guidance, consult a financial advisor or the official Social Security Administration website.
This information is based on 2025 limits and rules. Always check the official SSA website for the most up-to-date information before making financial decisions..
