Understanding the Full Retirement Age (FRA)
Your Full Retirement Age (FRA) is the specific age designated by the Social Security Administration (SSA) at which you can receive 100% of your basic Social Security benefit, known as the Primary Insurance Amount (PIA), without any reductions. For those born in 1960 or later, the FRA is 67. The FRA is a critical benchmark for anyone planning to work while also receiving Social Security benefits, as it marks the point when the annual earnings limit no longer applies.
The Earnings Limit Before Full Retirement Age
If you choose to start collecting Social Security benefits before reaching your FRA, you will be subject to an annual earnings limit. If your income from wages or self-employment exceeds this limit, the SSA will temporarily withhold some of your benefits. The rules for this withholding differ depending on how close you are to your FRA.
- Before the year you reach FRA: The SSA deducts $1 from your benefits for every $2 you earn over the annual earnings limit. For 2025, this limit is $23,400.
- In the year you reach FRA: A higher earnings limit applies, and the reduction is less severe. In 2025, for example, the limit is $62,160. For every $3 you earn over this amount, $1 is withheld from your benefits. This higher limit only applies to earnings made in the months before you reach your FRA. The moment you hit your FRA, the earnings test disappears entirely.
The Age for Unlimited Earnings
The simple answer to the key question is that you can earn unlimited income and still receive your full Social Security benefit starting with the month you reach your full retirement age. For those born in 1960 or later, this means starting at age 67. There is no earnings test or limit from that point forward. You can continue to work full-time, part-time, or start a new business, and your Social Security check will not be reduced due to your earned income. This provides significant financial flexibility for many seniors who wish to remain active in the workforce.
What if my benefits were reduced before FRA?
If your benefits were reduced or withheld because of excess earnings before your FRA, those benefits are not lost forever. Once you reach your FRA, the SSA will automatically recalculate your benefit amount. They will credit you for the months when benefits were withheld due to the earnings test, resulting in a higher monthly payment for the rest of your life. This process is automatic, so there is no need to file any special paperwork.
How Working Can Increase Your Future Benefits
Continuing to work, even after you start collecting benefits, can potentially increase your Social Security benefit amount. The SSA calculates your benefit based on your 35 highest-earning years. If you work another year and your income is higher than one of the years in your original calculation, your benefit will be automatically recalculated to reflect the new, higher earnings. This can lead to a slightly larger benefit amount each year that your new earnings replace a lower-earning year from your past.
Tax Implications of Working and Collecting Social Security
While working after FRA won't reduce your Social Security benefits, your earned income and your benefits could be subject to federal and state income taxes. This is a separate consideration from the earnings limit. The rules for taxation of Social Security benefits are based on your combined income (your adjusted gross income + nontaxable interest + half of your Social Security benefits).
How to Estimate Your Tax Liability
To determine if your Social Security benefits will be taxed, you need to calculate your provisional income. The thresholds for 2025 are:
- Single filers: If your provisional income is between $25,000 and $34,000, up to 50% of your benefits may be taxable. Above $34,000, up to 85% may be taxable.
- Married filing jointly: If your provisional income is between $32,000 and $44,000, up to 50% of your benefits may be taxable. Above $44,000, up to 85% may be taxable.
This means that earning unlimited money could significantly increase your taxable income, potentially pushing you into a higher tax bracket and increasing the portion of your Social Security benefits that are taxed.
Comparing Scenarios: Working at Different Ages
Understanding the differences between collecting benefits at different ages can help you make an informed decision for your financial future. Here is a comparison of what happens when you work while collecting benefits at age 62 versus after your FRA.
| Feature | Working While Collecting at Age 62 (Pre-FRA) | Working While Collecting After FRA |
|---|---|---|
| Earnings Limit | Yes, annual limit applies. For 2025, it's $23,400. | No, no limit on earnings. |
| Benefit Reduction | Benefits reduced by $1 for every $2 earned over the limit. | None. You receive your full benefit, no matter how much you earn. |
| Benefit Recalculation | Benefit amount is increased at FRA to credit withheld benefits. | N/A |
| Potential Benefit Increase | Additional earnings may replace lower-earning years, potentially increasing future benefits. | Additional earnings may replace lower-earning years, potentially increasing future benefits. |
| Income Tax Risk | Combined income from wages and benefits may trigger federal taxes on your Social Security. | High income from unlimited earnings and benefits is more likely to result in federal taxes on your Social Security. |
| Monthly Benefit Amount | Reduced benefit amount due to early claiming, plus potential withholding from earnings. | Full, unreduced benefit amount. |
Conclusion: Strategic Financial Planning
Knowing at what age you can make unlimited money and still collect Social Security is just one piece of the retirement puzzle. The ability to earn without penalty from your FRA onwards offers substantial freedom. However, it is crucial to consider all the variables, including the lifelong benefit reduction for claiming early, the potential for increasing your future benefits by continuing to work, and the tax implications of your combined income. Planning strategically, perhaps with a financial advisor, can ensure you maximize your Social Security and make the most of your retirement years, whether you choose to keep working or not. For more detailed information, consider reviewing the official resources from the Social Security Administration here.
