No earnings limit at or after full retirement age
Once you have reached your full retirement age (FRA), there is no limit on the amount you can earn from work while receiving Social Security retirement benefits. The Social Security Administration (SSA) will not reduce your benefits based on your income from wages or self-employment at or after your FRA. This differs significantly from the rules for working before your FRA.
What is your full retirement age?
Your full retirement age is determined by your birth year. It ranges from 66 for those born between 1943 and 1954, increases gradually for those born between 1955 and 1959, and is 67 for anyone born in 1960 or later.
Working during the year you reach full retirement age
In the year you reach your FRA, special rules apply to earnings in the months before your birthday. For 2025, you can earn up to $62,160 in these months without a benefit reduction. If you earn more, $1 is deducted from your benefits for every $3 over the limit. However, starting the month you reach your FRA, there is no earnings limit.
What income counts toward earnings limits?
Only certain types of income count towards the Social Security earnings test. Wages, bonuses, commissions, and net earnings from self-employment are included. Income such as pensions, annuities, investments, interest, and other government benefits do not count.
Benefits of working after full retirement age
Working after reaching your FRA offers several advantages.
How working can increase your Social Security benefit
Working can lead to a higher monthly Social Security benefit. The SSA calculates your benefit using your 35 highest-earning years. If your current earnings are higher than a past lower-earning year, your benefit will be recalculated and potentially increased. Additionally, if your benefits were previously withheld due to earnings before your FRA, you will receive credit in the form of higher monthly payments once you reach your FRA.
Additional financial advantages
- Delayed use of savings: Earned income can help cover expenses, allowing your retirement savings like 401(k)s and IRAs more time to grow.
- Other benefits: Working can provide social interaction, a sense of purpose, and has been associated with health benefits.
How working affects Social Security benefits before full retirement age
If you have not reached your FRA, your earnings will temporarily reduce your Social Security benefits if they exceed a certain limit. This is called the Retirement Earnings Test.
2025 Earnings Limits
- Under FRA all year: The 2025 limit is $23,400. The SSA deducts $1 in benefits for every $2 earned over this limit.
- Year you reach FRA: For 2025, a limit of $62,160 applies to earnings in the months before your FRA. The SSA deducts $1 in benefits for every $3 earned over this limit.
Comparison table: Earnings Limits by Age
| Age Status | Annual Earnings Limit (2025) | Benefit Reduction Formula | What Happens to Withheld Benefits? |
|---|---|---|---|
| Before FRA (all year) | $23,400 | $1 deducted for every $2 earned over the limit | Credited back to you with higher payments at FRA |
| Year you reach FRA | $62,160 (for months before FRA) | $1 deducted for every $3 earned over the limit | Credited back to you with higher payments starting at FRA |
| At or After FRA | No limit | No deduction, no matter how much you earn | N/A |
Taxes on Social Security benefits when working
Even after reaching your FRA, your Social Security benefits may be taxed depending on your combined income. Combined income includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits.
- If your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (joint), up to 50% of your benefits may be taxable.
- If your combined income exceeds $34,000 (single) or $44,000 (joint), up to 85% of your benefits may be taxable.
Working can increase your combined income, potentially making more of your Social Security benefits taxable. The IRS website provides more information, or you can consult a tax professional.
Conclusion
Working past age 65 can be beneficial, especially once you've reached your full retirement age, as the earnings limit is removed. Earning income after FRA can boost retirement savings and potentially increase future Social Security benefits. If you are under FRA, be aware of the earnings limit to avoid temporary benefit reductions, which are later credited back. Understanding these rules and the tax implications is crucial for managing your income and retirement effectively.
