Your Full Retirement Age (FRA) is Key
For most people, the age you can work with no earnings limit is your Full Retirement Age (FRA). Your FRA depends entirely on your year of birth. While you can begin receiving Social Security benefits as early as age 62, doing so subjects you to a retirement earnings test that limits how much you can earn before a portion of your benefits is temporarily withheld.
The FRA was established by Congress in 1983 and was gradually increased from 65 to 67. The age is now static at 67 for anyone born in 1960 or later. Reaching this age is the green light for earning an unlimited income from work without a reduction in your Social Security benefits.
Full Retirement Age by Birth Year
To determine your specific FRA, consult the following table based on your year of birth:
| 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 or later | 67 |
Navigating the Earnings Limit Before Full Retirement Age
If you choose to receive Social Security benefits before reaching your FRA, you can still work, but you must be mindful of the annual earnings limit. The Social Security Administration (SSA) will temporarily withhold a portion of your benefits if your earnings exceed a certain amount, which is adjusted each year for inflation.
For 2025, the annual earnings limit is \$23,400 if you are under your FRA for the entire year. The SSA deducts \$1 from your benefits for every \$2 you earn over this limit.
Special Rules for the Year You Reach FRA
The rules change in the calendar year you reach your full retirement age. In 2025, a higher annual earnings limit of \$62,160 applies, and the reduction is only \$1 for every \$3 you earn over the limit. Importantly, this higher limit and deduction rate only apply to the earnings you make in the months before the month you reach your FRA. Beginning with the month you reach your FRA, the earnings limit disappears entirely.
The Monthly Earnings Test Exception
There is a special rule for one year, typically the first year you begin receiving benefits. It allows the SSA to use a monthly earnings test instead of the annual limit. This can be beneficial if you stop working mid-year. For example, if you retire in June and start benefits then, your pre-retirement earnings from January to May won't count toward the annual limit, as long as you earn below the monthly threshold for the rest of the year.
What Happens to Withheld Benefits?
Some people worry that the benefits withheld before they reach their FRA are lost forever. This is not the case. Once you reach your FRA, the SSA recalculates your benefit amount to give you credit for the months in which benefits were withheld. This results in a higher monthly payment for the rest of your life. The increase helps to offset the amount that was initially held back. However, your overall lifetime benefits may still be lower compared to delaying your claim until your FRA.
The Calculation: Working Before and After FRA
Understanding how your earnings affect your benefits requires a comparison of different retirement scenarios. Here's a breakdown of the working and claiming process:
| Scenario | Age 62 to FRA | Year of FRA | After FRA |
|---|---|---|---|
| Work and Earnings | Work is allowed, but benefits are reduced if earnings exceed the annual limit. | Work is allowed, but benefits are reduced for earnings exceeding the higher annual limit before FRA month. | You can earn any amount from work with no reduction to your Social Security benefits. |
| Annual Earnings Limit (2025) | \$23,400 | \$62,160 (for months before FRA) | No limit. |
| Benefit Withholding | \$1 is deducted for every \$2 earned over the limit. | \$1 is deducted for every \$3 earned over the limit. | No withholding due to earnings. |
| Benefit Recalculation | Withheld benefits are used to increase your monthly payment after you reach FRA. | Withheld benefits are used to increase your monthly payment. | Not applicable, as no benefits are withheld. |
Strategies for Working Seniors
Choosing when to start your benefits is a personal financial decision. Here are some strategies to consider:
- Delay Your Claim: If you have other income sources and can afford to, delaying your Social Security claim until your FRA or even age 70 will maximize your monthly benefit. For each year you delay past your FRA up to age 70, you receive delayed retirement credits, which provide a significant boost.
- Manage Your Income: If you plan to start benefits early and continue working, monitor your earnings closely to stay under the annual limit. Some retirees work part-time or manage self-employment income to avoid the earnings test penalty.
- Understand What Counts as Earnings: For the retirement earnings test, the SSA only counts earned income from wages and net self-employment. Other income sources like pensions, annuities, investment earnings, and government benefits are not included.
- Keep Your Records: The SSA relies on your reported earnings, but misunderstandings can happen. It is wise to keep careful records, especially if you retire mid-year. If you stop working and claim benefits, the monthly test may apply, and keeping your final paystub or a letter from your employer can help clarify your situation if the SSA initially assesses a penalty based on your high early-year earnings.
The Final Word
Deciding when to claim your Social Security benefits while working is a complex but manageable process. The key takeaway is that once you reach your Full Retirement Age, you can work as much as you want without having your benefits reduced. Before that, earning above the annual limit will lead to temporary benefit withholding, but those funds aren't lost—they are factored into a higher monthly benefit after your FRA. By understanding the rules and planning accordingly, you can make the right financial decision for your retirement.
For more specific information on working while receiving benefits, consult the official SSA guidance.
