Understanding the Full Retirement Age and the Earnings Limit
For individuals born in 1960 or later, the full retirement age (FRA) is 67. This is a crucial detail because it determines whether your work earnings will impact your Social Security benefits. The Social Security Administration (SSA) enforces an 'earnings test' or 'retirement earnings limit' only for beneficiaries who have not yet reached their FRA. Once you cross that threshold, you can work as many hours as you'd like without penalty.
For those collecting benefits before their FRA, the rules are different and can be quite strict. In 2025, for example, if you are under your full retirement age for the entire year, the earnings limit is $23,400. If you earn over this amount, the SSA will deduct $1 from your benefits for every $2 you earn above the limit. This deduction is temporary, and your benefits will be recalculated at your FRA to account for the amounts that were withheld.
The Year You Reach Your Full Retirement Age
The year you reach your full retirement age has its own set of rules that act as a bridge to having no earnings limit. In 2025, if you reach FRA, a higher earnings limit of $62,160 applies, and the deduction is $1 for every $3 earned over the limit. This higher limit and deduction rate only apply to the months before you reach your FRA. Beginning with the month of your birthday, the earnings limit is completely removed.
Potential Implications of Working at 67
While the SSA removes the earnings limit at age 67, there are other financial considerations to be aware of if you continue to work. The extra income could affect other areas of your financial life. The extra income could affect other areas of your financial life, including the taxation of your Social Security benefits.
Taxation of Social Security Benefits
Earning income while retired can make a portion of your Social Security benefits taxable at the federal level. The taxability of your benefits depends on your "combined income," which is your adjusted gross income plus any tax-exempt interest income and one-half of your Social Security benefits.
Here’s how the thresholds work:
- Up to 50% of benefits may be taxable: For single filers with combined income between $25,000 and $34,000, or joint filers with combined income between $32,000 and $44,000.
- Up to 85% of benefits may be taxable: For single filers with combined income over $34,000, or joint filers with combined income over $44,000.
Potential for Higher Future Benefits
Continuing to work and pay Social Security taxes beyond your FRA can actually increase your future benefits. The SSA automatically recalculates your benefit every year based on your latest earnings, and if your most recent year is one of your highest earning years, your monthly payment will be adjusted upward. This means your years of working at 67 or older can replace a lower-earning year in your past, leading to a higher benefit.
Comparison: Working Before vs. At Full Retirement Age
Understanding the contrast between working before and at full retirement age is key to making informed decisions about your retirement timeline.
| Feature | Working Before Full Retirement Age (e.g., at 62) | Working At or After Full Retirement Age (at 67) |
|---|---|---|
| Earnings Limit | An annual earnings limit applies. In 2025, it is $23,400. | No earnings limit. You can earn any amount. |
| Benefit Reduction | $1 is deducted from benefits for every $2 earned over the annual limit. | No benefits are reduced due to your earnings. |
| Benefit Recalculation | Withheld benefits are credited back to you in the form of a higher monthly payment once you reach FRA. | Your monthly benefits may increase if you have a high-earning year, as your earnings are added to your record. |
| Tax on Benefits | Extra income can trigger federal taxes on a portion of your Social Security benefits. | Extra income can also trigger federal taxes on a portion of your Social Security benefits. |
| Health Insurance | If you're not yet 65, you might need to find alternative health insurance (e.g., through your employer or COBRA). | Working part-time after enrolling in Medicare (at age 65) can provide supplemental income without affecting Medicare eligibility. |
Planning for a Flexible Retirement
Working at 67 offers a great deal of flexibility. Since there's no earnings limit, you can work as much or as little as you want, giving you more control over your income and lifestyle. Many retirees choose to work part-time to stay socially engaged and supplement their retirement income. Whether it’s continuing in your career on a reduced schedule, starting a new passion project, or taking a completely different job for social benefits, you have the freedom to choose.
Conclusion
For those at full retirement age, specifically 67 for anyone born in 1960 or later, there is no federal limit on how many hours you can work while collecting Social Security benefits. The restrictions and temporary benefit reductions that apply to those who collect benefits early do not affect you. This allows for a flexible retirement where you can earn as much or as little as you desire, though it is still important to consider potential tax implications on your benefits. For many, the ability to earn unlimited income provides a valuable way to supplement retirement savings, stay active, and enjoy a fulfilling and engaging lifestyle. For more information, consult the official Social Security Administration guide on how work affects your benefits.
