Did you know that you can continue to work and collect Social Security? It's true, but there are some important things to consider.
Retirement
Collecting Social Security benefits while working
Learn how working impacts Social Security benefits, including earnings limits, tax implications, and strategies to maximize your retirement income.
Retirement
Social Security
When to take Social Security
Taxes
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Can you work and collect Social Security benefits?
Yes, you can. However, collecting Social Security income and working can affect both your tax bill and the amount of benefits you receive. If you work while collecting Social Security benefits, here are some things you should know:
- Depending on how much you earn, the Social Security Administration may temporarily reduce your benefits if you work and collect benefits before full retirement age (FRA).
- Once you reach FRA, there's no limit on how much you can earn. Your benefits won't be reduced.
- Earning too much can cause your Social Security benefits to be subject to tax.
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How working affects Social Security benefits
If you're hoping to use Social Security as a supplemental income stream while working, be mindful of earnings limits that apply before you reach full retirement age (FRA). Your work income might decrease your monthly payout. In fact, you could earn so much that your entire Social Security benefit is withheld, leaving you with only one stream of income.
Working while collecting benefits can also affect spousal and survivor benefits. You can work while receiving these benefits, but if you earn too much before your FRA, your benefits will be reduced.
However, the reduced amount isn't lost; it will be added back to your benefits when you reach FRA. If you're a spouse or survivor receiving benefits for minor children or children with disabilities, you won't get this increase if your benefits were reduced due to work.
Social Security earnings limits for 2025
Before you reach full retirement age (FRA), the Social Security Administration has an earnings test that determines how much money you can make from working while still receiving your full Social Security benefit. Only certain types of income count toward the earnings limits, which we discuss later in this article.
Working and collecting before FRA
If you collect benefits between age 62 and your FRA, your income is subject to an earnings test. If you earn too much, your benefits will be temporarily reduced.
- The 2025 Social Security earnings limit is $23,400.
- Your benefit will be reduced by $1 for every $2 you earn above this limit.
- Once you reach FRA, any benefits withheld will be returned to you in the form of higher monthly payments.
Working and collecting in the year you reach FRA
While the earnings test still applies, the rules are a little different in the calendar year you reach FRA.
- The 2025 Social Security earnings limit is $62,160.
- Your benefit will be reduced by $1 for every $3 you earn above the limit.
- The reduction only applies to income earned above the limit in the months leading up to your birthday month.
- Once you reach your FRA birthday month, any withheld benefits will be returned to you in the form of higher monthly payments.
Special rule for the year you retire
If you retire before reaching FRA, and you've already earned more than the annual earnings limit, there's a Special Earnings Limit Rule that applies for that year.
It allows you to receive a full Social Security check for each whole month the Social Security Administration considers you to be retired, regardless of your yearly earnings.
You'll receive your full monthly benefit if:
- You're younger than FRA the entire year, your monthly earnings in retirement fall within a certain range ($1,950 or less in 2025), and you didn't perform substantial services in self-employment.
- You reach FRA in the year you retire, your monthly earnings in retirement fall within a certain range ($5,180 or less in 2025), and you didn't perform substantial services in self-employment.
Working and collecting at FRA and after
You'll receive your full benefit, regardless of how much you earn. Here are some advantages to working once you reach FRA:
- Starting the month you reach FRA, there's no longer an earnings limit.
- You can add to your earnings record, potentially resulting in higher monthly benefits when you claim Social Security.
- You can continue to contribute to your IRAs and 401(k), including through catch-up contributions. This means more money in your accounts with the opportunity to grow tax-deferred1 or tax-free,2 depending on the type of account you own.
If your expected earnings are different from what you initially reported, the Social Security Administration encourages you to update your report. You can visit the Social Security Administration's website to get more details about benefits and rules.
What types of income count toward the earnings limit?
Only certain types of income count against the Social Security allowable income limits. This could include:
- Wages, bonuses, commissions, and vacation pay from a job in the year they're earned, not paid. For example, bonuses may be earned in one year but paid the following year.
- Net earnings from self-employment when they're paid, not earned—unless they're paid the year after you become entitled to Social Security and earned before you become entitled.
- Contributions to a pension or retirement plan if that amount is included in your gross wages.
Certain earnings don't count toward the earning limit, like:
- Investment income and interest.
- Pensions.
- Annuities.
- Veteran, military, or other government benefits.
- Rental income.
- IRA or retirement plan withdrawals or required minimum distributions.
- Inheritances.
- Capital gains.
- Spouse's salary or wages.
Can working while collecting Social Security increase your benefits?
Yes, it's possible. Social Security is calculated using your average indexed monthly earnings (AIME) based on your top 35 highest-earning years, which don't have to be consecutive. If you have a year of higher earned income during retirement, it will replace a lower-earning year and become part of your 35 highest-earning years.
This will boost your Social Security payment by increasing the AIME used to calculate your benefit. Social Security benefit increases don't take effect immediately but will be automatically added in the following year—no special forms or paperwork needed.
What happens when you reach full retirement age?
Taking your retirement benefit before you reach full retirement age (FRA) has advantages and disadvantages. If you take it earlier, you receive benefits for a longer period of time. However, your monthly benefit amount will be reduced. If you work after reaching FRA, your earnings are exempt from the earnings test and the earnings limit doesn't apply.
At FRA, any previously withheld benefits will be recalculated and factored back into your monthly payments. Each person's situation is unique, so it's important to consider that:
- Claiming Social Security early can reduce the risk of leaving benefits unclaimed in the event of an unexpected death.
- Earnings limits might affect your overall plan before you decide when to start receiving your retirement benefits.
- If you wait to collect until after you reach FRA, you'll be eligible for delayed retirement credits, which can increase your monthly benefit
FRA ranges between 66 to 67 depending on your birth year. Here's a breakdown:
| Birth year | 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 |
How does working affect taxes on Social Security?
Working in retirement can have a big impact on your taxes, especially when it comes to your Social Security benefits. It's important to understand how your combined income affects your taxes. Combined income is the total of your adjusted gross income (AGI), any nontaxable interest, and half of your Social Security benefits.
This can include wages and passive income, which could increase your AGI and, therefore, increase the taxability of your Social Security benefit. If your combined income is too high, you might have to pay taxes on some of your Social Security benefits.
Understanding taxes on Social Security
Filing single:
- $25,000 to $34,000 in combined income: Up to 50% of the benefits may be taxable.
- Over $34,000 in combined income: Up to 85% of the benefits may be taxable.
Married filing separately:
- If you’re married and file a separate return, you’ll most likely have to pay taxes on your benefits.
- If you’re not sure about your situation, we encourage that you speak with a tax professional. You can also use this IRS tool to get an estimated calculation.
Married filing jointly:
- $32,000 to $44,000 in combined income: Up to 50% of the benefits may be taxable.
- Over $44,000 in combined income: Up to 85% of the benefits may be taxable.
Maximum tax: The most that can be taxed is 85% of your Social Security benefits, no matter how much you earn.
To avoid a big tax bill at the end of the year, you can choose to pay taxes throughout the year by making estimated tax payments or having taxes taken out directly from your Social Security benefits. Planning ahead and managing your income can help you avoid surprises and keep more of your money.
Benefits of delaying Social Security if you plan to work
Delaying Social Security benefits means choosing to start receiving your retirement benefits at a later age than your full retirement age (FRA). By delaying your benefits, you can increase your monthly payments due to delayed retirement credits. Delayed retirement credits are additional benefits that boost your Social Security checks by up to 8% for each year you delay past your FRA, up to age 70. There's no benefit to delaying benefits after age 70 because there's no further increase in benefits beyond that age.
When deciding whether to delay Social Security, consider the following factors:
- Cash needs: If you need the income to cover living expenses and don't have other sources of income, you might need to start benefits earlier. If you have sufficient resources, you can afford to wait and potentially receive higher benefits later.
- Life expectancy: If you expect to live longer than the average life expectancy, delaying benefits can be beneficial due to larger monthly payments. If you have a shorter life expectancy or are in poor health, taking benefits earlier might be more appropriate.
- Marital status: If you're married, consider your spouse's age, health, and benefits. If you're the higher earner, you can delay benefits to ensure your surviving spouse receives a higher benefit. If you're divorced and were married for at least 10 years, you can still receive benefits based on your ex-spouse's record.
- Employment status: Waiting until you reach your FRA or until your earned income is below the limit can maximize your benefits. If you're no longer working and need the income, you might consider taking benefits earlier.
- Tax efficiency: Waiting to take Social Security can create a window of lower income between retirement and when you begin claiming benefits. This delay may allow you to convert money in a traditional IRA or 401(k) to a Roth IRA at a lower tax rate.3 Since Roth IRAs don't have required minimum distributions (RMDs), this can help you manage taxes efficiently and build tax-free income in retirement.
Additionally, delaying your Social Security benefits also automatically delays spousal benefits your partner receives. However, this doesn't apply to survivor or disability benefits, which can be claimed independently of your personal retirement benefit.
Strategies for maximizing Social Security benefits while working
Retirement is a time when you can still make a big difference in your financial life. Working can provide extra income and a sense of purpose. It can be a great benefit as long as you’re you're mindful of the guidelines and potential drawbacks. Consider these ways that working during retirement can help you make the most of your retirement benefits and keep more money in your pocket:
- Once you reach your full retirement age, you can earn extra money by working while collecting Social Security without losing any benefits.
- You can save more by contributing to a Roth IRA, from which your withdrawals in retirement are tax-free.2
- If you're over 50, you can even make extra contributions to your 401(k) or IRA, adding up to an extra $7,500 to your 401(k) and $1,000 to your IRA in 2025.
Boost your financial security and enjoy a happy, fulfilling retirement by managing your income wisely.
Get the most from your Social Security benefits.
Frequently asked questions
Yes, you can collect Social Security and work full-time, but your benefits might be reduced if you earn above a certain limit before reaching your full retirement age.
How much you can earn while collecting Social Security depends on various factors—age, earnings amount, and more. Overall, you can earn up to a certain limit each year while collecting Social Security without affecting your benefits, but if you earn more, your benefits might be reduced until you reach your full retirement age.
Working part-time can increase your Social Security benefits over time by potentially raising your average earnings, but it may also reduce your current benefits if you earn above the annual limit before reaching full retirement age.
There's no specific limit on hours you can work while receiving Social Security benefits, but your earnings might affect your benefits if they exceed the annual limit before full retirement age.
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1When taking withdrawals from an IRA or 401(k) before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
2Withdrawals from a Roth IRA are generally tax-free if you are over age 59½ and have held the account for at least five years; withdrawals of earnings taken prior to age 59½ or five years may be subject to ordinary income tax or a 10% federal penalty tax, or both. (A separate five-year period applies for each conversion and begins on the first day of the year in which the conversion contribution is made.)
3Converting assets from pre-tax accounts like traditional IRAs or 401(k)s into a Roth IRA, which has contributions made from post-tax dollars, may be considered a taxable event. Please consult a tax professional if you're not sure how this will affect your taxability.
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