Understanding Full Retirement Age (FRA)
Your Full Retirement Age (FRA) is the age at which you are entitled to receive 100% of your Social Security retirement benefits, based on your earnings record. It's also the age when you can work and earn any amount of income without having your Social Security benefits reduced due to the earnings test. This age has been increasing gradually over time for different birth years.
Full Retirement Age by Year of Birth
For a clear understanding of your specific FRA, consult the official Social Security chart. For anyone born in 1960 or later, the FRA is 67.
| Year of Birth | Full Retirement Age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Working Before Your Full Retirement Age
If you begin collecting Social Security benefits before reaching your FRA, you can still work, but your benefits may be temporarily reduced if your earnings exceed the annual limit. This rule, known as the Social Security Earnings Test, is a critical factor for early retirees to understand.
How the Earnings Test Works
For 2025, the annual earnings limit for those under FRA for the entire year is $23,400. The Social Security Administration (SSA) will deduct $1 in benefits for every $2 you earn above this limit.
The Year You Reach Your Full Retirement Age
In the calendar year you reach your FRA, a higher earnings limit applies to income earned before the month you reach your FRA. In 2025, that limit is $62,160. During this period, the SSA deducts $1 in benefits for every $3 you earn over the limit. Beginning with the month you reach your FRA, the earnings limit disappears entirely.
The Recouping of Withheld Benefits
Importantly, any benefits withheld due to the earnings test are not permanently lost. Once you reach your FRA, the SSA will recalculate your monthly benefit amount to give you credit for the months in which benefits were withheld, resulting in higher monthly payments for the rest of your life. This mechanism ensures that the reductions are temporary, not a permanent loss of funds.
The Calculation: How Withholding is Applied
The SSA applies the earnings test by withholding your benefits until the total reduction is met. For example, if you are under FRA all year and earn $5,000 above the annual limit, the SSA will withhold $2,500 of your benefits ($1 for every $2). This is done by holding back monthly checks until the total has been withheld. A special rule applies in the first year of retirement, allowing you to receive a full check for any month you were considered "retired," regardless of total annual earnings.
Potential Upsides of Working in Retirement
Working during retirement can offer several benefits beyond just extra income. Your earnings may increase your future Social Security benefits, as the SSA reviews your record annually. If your latest year of earnings is one of your highest 35 years, it will be automatically factored into your benefit calculation, potentially increasing your monthly payments. This is an especially beneficial aspect for those who have lower earning years earlier in their career. For more detailed information on how working affects benefits, visit the official Social Security website.
Working After Your Full Retirement Age
Once you reach your FRA, you can earn as much as you want from employment or self-employment without it affecting your Social Security benefits. This provides significant flexibility for seniors who wish to remain in the workforce, whether full-time, part-time, or in a consulting role. It allows for a dual income stream from both work and Social Security without any penalty or reduction.
Continuing to Work and Maximize Benefits
For those who reach their FRA and continue to work, their ongoing earnings can still increase their lifetime benefits. The SSA uses your highest 35 years of indexed earnings to calculate your benefit. If you have higher earnings later in your career, it can replace a lower-earning year, leading to a higher overall benefit. Waiting to claim benefits until age 70 can also result in delayed retirement credits, which provide a permanent increase to your monthly benefit.
Conclusion
For a smooth transition into retirement, understanding the rules about working and collecting Social Security is essential. The age you can retire and work without penalty is your Full Retirement Age, which depends on your birth year. Before that, earnings limits apply, but any temporary reductions are recouped through higher future benefits. For those who enjoy working, reaching FRA opens up the opportunity to combine unlimited earnings with full Social Security benefits, providing financial security and flexibility in later life.
