Many people receiving Social Security retirement benefits choose to continue working or return to work. Some enjoy the social aspect of work, while others have a financial need. However, working past your “retirement” can affect your monthly benefit from the Social Security Administration.
Just how much can you earn while receiving Social Security? The answer depends on whether or not you have reached full retirement age. Working can potentially decrease your monthly benefit payment and cause your Social Security benefits to become taxable. Keep reading as we tell you how much you can earn while on Social Security without affecting your benefits
How Working After Retirement Affects Your Social Security Benefits
Once you apply for Social Security retirement benefits, the Social Security Administration (SSA) considers you retired for their purposes. Working past retirement can affect your retirement benefits in a couple of different ways. First, it might reduce your monthly benefit amount. If you earn more than the Social Security earnings limit, your benefit will be reduced accordingly. The limit depends on your current age, and we will discuss the limits in more detail later in this article.
Even though your benefits are reduced when you work and earn more than the Social Security limit, you will receive credit for these reduced benefits upon reaching full retirement age. Your benefit amount will be recalculated to account for the amounts that Social Security has previously withheld. So, even though your benefits are lower while you continue to work, the withheld amount will not be lost forever.
You should also know that only earned income counts toward the Social Security limit. In effect, only money earned at a job or self-employment profit counts toward the limit. The income from retirement accounts, annuities, IRAs, or other similar sources will not affect the amount of your retirement benefit.
In addition to a reduction in benefits, working past retirement might also cause your Social Security benefits to become taxable. Whether or not you pay income tax on your Social Security benefits depends on your total income. When assessing the taxability of your benefits, all your income will be counted. Even income from retirement accounts or other “unearned” income will count toward the total. If your benefits are taxed, only 50% or 85% of them will be taxed, depending on your total income.
What Is Full Retirement Age?
Most people wait until full retirement age (FRA) to collect Social Security benefits, although you can start benefits early. Similarly, you can delay the start of your benefits past FRA to increase the amount of your benefit. If you wait until age 70 to receive Social Security, your benefits will be maxed out. Remember how Social Security works? Starting your benefits early will reduce them, while starting them late will increase them. So, what is considered full retirement age? The answer depends on when you were born. Here are the details you need to know.
Over time, the Social Security Administration has had to raise the retirement age to account for the longer life expectancies of retirees. For those born in 1960 or after, the full retirement age is 67. For those born between 1943 and 1955, the full retirement age is 66. The age increases by two months every year between 1955 and 1960. So, for someone born in 1956, the full retirement age is 66 years and two months. For the birth year 1957, the age is 66 years and four months, and so on.
Remember that waiting past your full retirement age can increase your Social Security income. Your benefits will increase by 8% each year you delay starting them. Once you reach age 70, your benefits have maxed out. Therefore, there is no reason to wait past age 70 to start your benefits. Similarly, starting your benefits before the full retirement age will reduce your benefits. You can begin your benefits as early as age 62, but you will only receive 70% of your primary insurance amount.
You can try our Social Security Break Even Calculator to see how retiring early affects your benefits.
Social Security Income Limits Before Full Retirement Age
If you start your Social Security benefits before reaching full retirement age, continuing to work will have the largest effect on how much Social Security pays during this timeframe. If you are simply working a part-time job to maintain interaction with other people, then you might not have to worry about the income limit. However, if you have a full-time job, you are likely to run into the limit and have your benefits reduced. Here is how continuing to work before full retirement age will affect your benefits.
In 2024, the Social Security income limit is $22,320 (up from $21,240 in 2023) if you are under full retirement age for the entire year. For every $2 you earn above this limit, your benefits will be reduced by $1.
Let’s look at an example. First, we will assume that you are under full retirement age for the entire year. Next, let’s assume that you earn $34,320 by working a full-time job all year. You can see that this is $12,000 more than the 2024 earnings limit. Your benefits will be reduced by $1 for every $2 you earn over the limit, so your benefits will be reduced by $6,000 for the year, or $500 each month.
Remember that you will not lose those benefits forever. Once you reach full retirement age, your benefit amount will be adjusted to account for the previously withheld benefits. So, you should see an increase in your payment amounts once you hit your full retirement age. Speaking of reaching full retirement age, a different limit applies for the year you reach this age.
You can read more here on What Type’s Of Income Count Towards The Social Security Income Limit
Social Security Income Limit During The Year You Reach Full Retirement Age
In 2024, the earnings limit for the year in which you reach full retirement age is $59,520 (up from $56,520 in 2023). Likewise, your benefits are reduced by $1 for every $3 you earn above this limit.
So, using the previous example, your benefits would not be reduced at all during the year in which you reach full retirement age. But suppose you had annual earnings of $89,520 that year. Since that amount is $30,000 above the limit, your benefits would be reduced by $10,000 for the year.
So, what happens when you reach full retirement age? We’ll discuss that in detail in the next section.
Social Security Income Limits After Full Retirement Age
You’ve learned how working before full retirement age affects your benefits, including during the year in which you reach full retirement age. So, what happens to your Social Security payments once you finally reach full retirement age? Will working still continue to reduce your payments? The answer is no. Beginning in the month in which you reach full retirement age, your benefits will no longer be affected by working. There is no limit to the amount you can earn, and there will be no reduction to your benefits. Even if you earn over $100,000, you will still receive your maximum benefit during the year.
In addition, the Social Security Administration will recalculate your benefit payment to account for the previously withheld benefits. You will get credit for the months that your benefits were reduced or withheld. You should also know that the Social Security Administration has a special rule for the earnings limit that applies to retirees whose earnings will be over the limit for the year but who will only receive benefits for part of the year. They will pay full benefits for any whole month during which you are retired, regardless of your annual income. It’s also important to note that even though your benefits will no longer be reduced after reaching FRA, they might become taxable if your earnings for the year are too high.
Reporting Excess Wages To The Social Security Administration
So, how will the Social Security Administration know that you earned more than the annual limit? The answer is that you will need to tell them. If you are going to earn more than the earnings limit, you should notify the Social Security Administration right away. This notification will allow them to properly adjust your benefits so that you are getting the correct direct deposit amount each month. Failure to notify the SSA could have adverse consequences.
If you fail to notify the Social Security Administration that you will make more than the earnings limit, they will eventually find out. When you file your income taxes the following year, they will be aware that you made more than the limit in the previous year. If you were still receiving full benefits during the previous year, that could spell bad news for your wallet, especially if you didn’t pay the proper amount of Social Security taxes. You will likely be forced to repay the excess benefits that you received. In addition, you might even owe some penalties and fees on those excess benefits.
Therefore, it is extremely important to notify the Social Security Administration right away if you think you might make more than the earnings limit before you reach full retirement age. If you have any questions about how it might affect your payments, you should consult a licensed advisor in your area. They can give you advice on the best approach for your personal financial situation.
How Working Affects The Taxation Of Your Benefits
You now know how work affects your benefit payment amounts, but did you know that working can also affect whether or not your benefits are taxed? There is also an earnings test when it comes to the taxability of your retirement benefits. Unlike the earnings test used for potential benefit reduction, almost all your income counts toward the taxability of your Social Security benefits. Even retirement plan income, like IRA or 401k withdrawals, counts toward the annual limit.
In 2024, if your combined income*, including half of your Social Security payments, exceeds $25,000, then 50% of your benefits are likely taxable. For a married couple filing a joint tax return, this limit increases to $34,000.
If your combined income for the year exceeds $34,000, then up to 85% of your benefits will be taxable. For a married couple filing a joint tax return, this limit increases to $44,000.
For beneficiaries who rely solely on Social Security, these limits are not usually met. However, if you have retirement income from other sources, it likely means that you will pay taxes on a portion of your Social Security benefits. No more than 85% of your Social Security benefits will be taxable, meaning you will keep 15% of your benefits tax-free, regardless of your total income.
*Combined income = your adjusted gross income + nontaxable interest + 1/2 your social security benefits.
Social Security Disability Benefits (SSDI) Income Limits
You might be wondering, “How much can I earn while on Social Security disability in 2024?” The answer can get a little complicated, but here are the details.
By receiving disability benefits, you have been found unable to perform substantial gainful activity. In essence, this means that you cannot work due to your disability. So, working while receiving a disability benefit is contradictory. However, you can have some income without it affecting your disability insurance payments.
In 2024, you can earn up to $1,550 per month (up from $1,470 in 2023) without any effect on your disability payments. For people who are blind, the limit increases to $2,460 (up from $2,590 in 2023)
SSDI Trial Period
In addition, the Social Security Administration encourages disability recipients to return to work when possible. To help with this, the SSA allows a trial work period during which benefit recipients may earn unlimited income without any effect on their benefits. The trial work period lasts for nine months, and the months do not have to be consecutive. For 2024, any month in which a person earns more than $1,110 (up from $1,050 in 2023), it is considered to be a trial work month. In effect, this allows a person to have nine months of unlimited income without any effect on their benefits, so they can test their ability to return to work.
After the trial work period ends, the person still has an extended period of eligibility. This means that the person will receive SSDI benefits during the months in which they earn less than $1,550 (up from $1,470 in 2023), but they will not receive benefits during the months in which they earn more than this amount. There is also a five-year period during which benefits can be quickly reinstated if the person is again unable to work due to their disability.
Supplemental Security Income (SSI) Income Limits
In 2024, individual SSI recipients can earn up to $943 per month (up from $914 in 2023), and couples can earn up to $1,415 (up from $1,371 in 2023). You can also not own more than $2,000 worth of assets ($3,000 for a couple), like bank accounts, household goods, etc.
It’s important to keep in mind that the rules surrounding countable income can be complicated. In effect, you can earn more than the income limit and still qualify, as the SSA doesn’t count certain income towards this limit. You can read about what income is not counted in the SSA’s Income Exclusions for SSI.
For students receiving SSI, the income exclusion amount is $2,290 per month (up from $2,220 in 2023), up to an annual limit of $9,230 (up from $$8,950 in 2023). Some states that offer additional payments may have a higher income limit for SSI recipients.
The Bottom Line
Working while receiving Social Security benefits can affect your payment amounts before you reach full retirement age. Your benefits will be reduced according to how far over the earnings limit you go. However, once you reach full retirement age, there is no limit to how much you can earn. After reaching this age, your benefits will not be reduced because of your income, regardless of how high your income is. Even though your Social Security check will not be reduced due to your income, it might become taxable if your income is too high. Since most retirees utilize Medicare for health care, your income might also increase your Part B premium amount.
Frequently Asked Questions
Can I draw Social Security at 62 and still work full-time?
Yes, you can draw Social Security at 62 and still work full-time. However, you should know that continuing to work before you reach full retirement age might reduce your benefits. If you earn more than the Social Security earnings limit, the Social Security Administration will reduce your benefits accordingly. Spousal and survivor benefits have slightly different rules than traditional retirement benefits, so make sure you are aware of the exceptions. You can use the Social Security benefits calculator at SSA.gov to learn more about how your benefits might be affected by working.
How much money can you make without it affecting your SSI?
For 2024, you can earn no more than $943 ($1,415 for couples) monthly and continue receiving SSI payments. In addition, you can have no more than $2,000 of countable assets ($3000 for couples). This program is designed to help low-income individuals and families. Therefore, the income and asset limits are quite low. Qualifying for SSI can also help you qualify for other assistance programs, like housing assistance, Medicaid, food stamps, and others.
What are the pros and cons of working and collecting Social Security?
One of the pros of working while collecting Social Security is that you can increase your total income. However, working while collecting Social Security can decrease your Social Security payments. Thankfully, the decrease in payments does not last forever, and you will get credit for the reduction eventually. Once you reach full retirement age, your benefits will no longer be reduced based on your income. Similarly, you will receive credit for the months during which your benefits were reduced or withheld.
Can I work full-time at 66 and collect Social Security?
Yes, you can work full-time at age 66 and still collect Social Security. If your full retirement age is 66, there is no limit to how much you can earn while receiving Social Security. If you are wondering, “At what age can you earn an unlimited income on Social Security,” the answer is full retirement age. Upon reaching full retirement age, your benefits will no longer be affected by earned income. So, if you wish to work full-time, you can do so and still receive your full benefit payments each month. This could potentially lead to a significant income during your “retirement” years.
