The short answer: It depends on your Full Retirement Age
There is no cap on how much money you can earn from working or other sources once you reach a certain age. However, the Social Security Administration (SSA) applies an earnings test that can temporarily reduce your benefits if you collect them before your Full Retirement Age (FRA). The good news is that once you reach your FRA, the earnings test no longer applies, and you can earn any amount of income without affecting your Social Security benefits.
For those born in 1960 or later, the FRA is 67. This means that for a 65-year-old in that cohort, working will still trigger the earnings test and its associated temporary withholding of benefits. However, other financial considerations, such as Medicare costs and income taxes, are also impacted by higher earnings regardless of your age.
How the Social Security earnings test works at age 65
If you are 65 and have already started collecting Social Security benefits, how the earnings test affects you depends on when you will reach your FRA. The rules are different for those who are under FRA for the entire year versus those who will reach FRA during the year.
Here are the Social Security earnings test limits for 2025:
- Under FRA for the entire year: The earnings limit is $23,400. For every $2 you earn over this limit, $1 will be deducted from your Social Security benefits.
- Reaching FRA in 2025: The earnings limit is higher, at $62,160, but only counts earnings before the month you reach your FRA. For every $3 you earn over this limit, $1 is deducted from your benefits.
- At or after FRA: The earnings test disappears. You can earn an unlimited amount of money from wages or self-employment without a reduction in your benefits.
Any benefits withheld due to the earnings test are not lost forever. Once you reach your FRA, the SSA recalculates your monthly benefit amount to credit you for the months you didn't receive benefits. This results in a permanently higher monthly payment for the rest of your life.
Beyond Social Security: The impact on Medicare premiums
While your ability to earn an unlimited income eventually stops affecting your Social Security benefits, high income can permanently increase your Medicare costs. If your modified adjusted gross income (MAGI) exceeds certain thresholds, you will be subject to an Income-Related Monthly Adjustment Amount (IRMAA) for both Medicare Part B and Part D.
Important points about IRMAA:
- MAGI is based on a two-year lookback: The premium you pay in a given year is based on your tax return from two years prior. For instance, your 2025 premiums are based on your 2023 tax return.
- Tiered surcharges: The IRMAA increases in tiers based on your MAGI. If you only exceed the lowest threshold by one dollar, you'll still be charged the full surcharge for that income bracket.
- Appeals are possible: If you have a significant life event that lowers your income, such as retirement or a work stoppage, you can appeal your IRMAA determination with the SSA.
Higher income means higher taxes
Earning more money at age 65 can also lead to a higher federal income tax bill, including on your Social Security benefits themselves. The taxation of Social Security benefits depends on your "combined income," which is your adjusted gross income, plus non-taxable interest, plus half of your Social Security benefits.
- Single filers: If your combined income is between $25,000 and $34,000, up to 50% of your Social Security benefits may be taxable. If it exceeds $34,000, up to 85% of your benefits may be taxable.
- Joint filers: For couples filing jointly, these thresholds are $32,000 and $44,000, respectively.
Remember, earning additional income may place you in a higher tax bracket, increasing your overall tax burden.
Comparison of earning impacts at different retirement ages
| Feature | Age 65 (Under Full Retirement Age) | At or After Full Retirement Age |
|---|---|---|
| Social Security Benefits | Subject to the Social Security earnings test. Benefits are temporarily withheld if you earn above the annual limit (e.g., $23,400 or $62,160 in 2025). | No earnings limit. You can earn an unlimited amount without benefits being reduced. |
| Medicare Premiums (IRMAA) | Your modified adjusted gross income (MAGI) from two years ago can trigger an Income-Related Monthly Adjustment Amount (IRMAA) surcharge. | Your MAGI can also trigger the IRMAA, resulting in higher Part B and Part D premiums, regardless of your work status. |
| Federal Income Tax | Higher income can result in a higher tax bracket and potentially make a portion of your Social Security benefits taxable. | Higher income will still increase your tax liability and can make up to 85% of your Social Security benefits taxable, depending on your income level. |
| Future Benefits | Benefits withheld due to the earnings test are not lost. They are used to increase your monthly payment once you reach your FRA. | Continuing to work after FRA can increase your Social Security benefit if your latest year of earnings is one of your highest 35 years. |
Conclusion: Planning for your income at 65
While the simple answer to "can you make as much money as you want at 65?" is yes, the full answer is more complex due to the interconnectedness of your earnings with Social Security benefits, Medicare premiums, and income taxes. The most significant factor is your Full Retirement Age. If you are not yet at FRA, earning too much can lead to a temporary reduction in your Social Security payments.
Even after reaching FRA, when the earnings limit disappears, a higher income can increase your Medicare costs and push a larger portion of your Social Security benefits into taxable territory. Careful financial planning can help you navigate these issues and make the best decisions for your personal situation. For detailed information on the earnings test and how work affects your benefits, refer to the official Social Security Administration guidelines.
