Social Security is an essential part of many people’s retirement plans. But what happens if you decide to keep working while receiving benefits? Does your job impact the amount you receive? If you’re asking these questions, you’re not alone. This article will explain how working can affect your Social Security benefits.
Understanding Social Security Benefits
Social Security is a government program that provides financial support to retired individuals, those with disabilities, and survivors of deceased workers. Workers pay into Social Security through payroll taxes during their careers, and in return, they receive benefits when they retire or are unable to work due to illness or disability.
However, many people don’t realize that if you continue to work while receiving Social Security benefits, your earnings can affect your benefits.
What Happens If You Work Before Full Retirement Age?
If you choose to work before reaching your Full Retirement Age (FRA), your Social Security benefits may be reduced. The FRA is determined by your birth year. For example, if you were born in 1960 or later, your FRA is 67 years old.
In the years before you reach FRA, there are limits to how much you can earn without it impacting your benefits. For 2025, the Social Security Administration (SSA) has set the following limits:
- If you are under FRA for the entire year, you can earn up to $21,240 without affecting your benefits. For every $2 you earn over this limit, $1 will be deducted from your benefits.
- In the year you reach FRA: You can earn up to $56,520 without it impacting your benefits. If you earn over this amount, the SSA will deduct $1 for every $3 you earn above the limit.
What Happens When You Reach Full Retirement Age?
Once you reach your FRA, you can earn any amount without any reduction in your Social Security benefits. The SSA will not deduct any money from your benefits, no matter how much you make. This is a significant advantage for those who are still working and want to maximize their benefits.
The Impact of Earning More Than the Social Security Limit
If you continue to work while receiving Social Security benefits, it’s essential to keep in mind that your earnings above the threshold will be deducted from your payments. However, the good news is that these reductions are not permanent.
When you reach your FRA, the SSA will recalculate your benefits to account for any months that were affected by the reductions. This means that you will receive a higher benefit amount in the future to make up for the deductions made while you were still working.
For example, let’s say you were under FRA and earned $30,000 in a year when the limit was $21,240. The SSA would reduce your benefits by $4,380 (the difference between your earnings and the limit, divided by two). But when you reach FRA, they will recalculate your benefits to ensure that you are compensated for those months.
Does Working Affect the Total Amount You Will Receive?
You might be wondering if working longer or earning more money will result in a higher overall Social Security benefit. The answer is yes!
Social Security benefits are calculated based on your highest-earning 35 years of work. So, if you keep working and your income increases, you may end up replacing a lower-earning year with a higher one, which could increase your monthly benefit.
If you are in good health and continue to work past your FRA, you might even decide to delay claiming Social Security benefits. The longer you wait to start receiving benefits (up until age 70), the higher your monthly benefit will be. This strategy can be a great way to maximize your lifetime benefits.
What If You Are Self-Employed?
If you are self-employed and continue working while receiving Social Security benefits, the same rules apply. However, as a self-employed individual, it’s important to keep track of your income, as it can sometimes be more complicated to report earnings. You will need to make sure your income is properly reported to the IRS and SSA so that any potential deductions or recalculations are accurately made.
What About Social Security Disability Benefits?
If you are receiving Social Security Disability (SSD) benefits, working can affect your eligibility. The SSA has set a limit on how much you can earn while receiving SSD benefits, which is called the Substantial Gainful Activity (SGA) limit. For 2025, the SGA limit is $1,470 per month for non-blind individuals and $2,460 per month for blind individuals. If you earn more than this limit, the SSA may stop your disability benefits.
Is It Worth Working While Receiving Social Security?
Deciding whether or not to continue working while receiving Social Security benefits depends on several factors. You should consider your financial goals, health, and retirement plans. If you need the extra income, working may be a good option, but be aware of the potential impact on your benefits.
If you want to keep working but are close to reaching FRA, it might be worth waiting until you reach that age to avoid any deductions from your Social Security benefits. In the end, your decision will depend on your unique financial situation and future goals.
Conclusion
Working while receiving Social Security benefits can be a bit tricky, but understanding how your earnings affect your payments can help you make an informed decision. Whether you are under FRA or have already reached it, it’s important to know the earning limits and how they can impact your monthly benefits.
If you plan on working, remember that you can still receive benefits, but they might be reduced temporarily. And once you reach FRA, you can earn as much as you want without it affecting your payments. Always keep in mind that your work can affect the long-term value of your benefits, so plan accordingly to ensure that you are making the best financial decisions for your future.
Disclaimer: This article has been meticulously fact-checked by our team to ensure accuracy and uphold transparency. We strive to deliver trustworthy and dependable content to our readers.
Jon King is an experienced journalist with 3 years of experience in the field. With a strong background in investigative reporting, Jon is known for his in-depth coverage of crime news, finance news, local news, and USA news. Currently working with Mikeandjonpodcast, Jon brings his sharp investigative skills, where he provides timely updates and analysis on a wide range of topics. His commitment to delivering accurate and impactful news has earned him a reputation for providing insightful and comprehensive stories that resonate with his audience.
