How Much Can I Make on Social Security?

Working can mean lower benefits until you reach full retirement age

You can collect Social Security benefits if you continue to work and earn an income. But if you make more than a certain amount from your work and haven't reached your full retirement age, your benefit will temporarily be smaller. Here's a rundown of how earned income can reduce your Social Security benefits.

Key Takeaways

  • You can get Social Security and work at the same time, but your monthly benefit may be reduced.
  • If you have reached full retirement age, you can receive your entire benefit, no matter how much you earn.
  • If your full retirement age is 67, you can begin collecting Social Security benefits when you turn 62.
  • If you haven't reached full retirement age, Social Security will deduct $1 from your benefits for every $2 or $3 you earn above a certain amount.
  • After you reach full retirement age, Social Security will increase your benefits to account for the money it withheld earlier.
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Can I Work While Collecting Social Security?

Working During Retirement

Remember the days when you could actually retire when you reached a certain age? You could travel, pursue hobbies, and spend more time with family and friends after decades of hard work.

With an increasing number of people unable to save enough to live out their later years in leisure, many are spending retirement working another job, if they retire at all. Of course, some people just enjoy working and want to continue their careers—or do something else that keeps them in the work world—during retirement.

Whatever your motivation, if you keep working after you start receiving Social Security, your eligibility for full benefits gets complicated.

How Social Security Credits Work

For some, qualifying for Social Security isn't that difficult. Over the course of your working life, you need 40 credits to be eligible for benefits, which is equal to 10 years of full-time work. In 2023, you get one credit for every $1,640 of earnings, which is an increase from the 2022 figure of $1,510, up to a maximum of four credits per year.

Social Security calculates your benefit amount based on your earnings over the years, whether you were self-employed or worked for an employer. The more money you earned, the more you paid into Social Security—and the higher your future benefits—up to certain limits. The math is much more complicated than this sounds, but that's basically how it works.

How Earnings Are Deducted From Benefits

The Social Security Administration permits retirees to work and still receive retirement benefits. However, if earnings exceed a certain threshold, benefits may be reduced. Rules differ for workers who earn income before the year of full retirement age and those who earn income during and after the year of full retirement age.

If before the year of full retirement and earning more than the limit, the social security benefit may be reduced by $1 for every additional $2 earned. For 2022, the limit is $19,560, and for 2023 is $21.240.

In the year the worker reaches full retirement age, the benefit is reduced by $1 for every additional $3 earned. In 2022, the earnings limit for these recipients is $51, 960. For 2023, the earnings limit is $56,520.

After reaching full retirement age, no deductions are made from benefits, regardless of how much the worker earns.

Social Security Reductions

For workers whose income exceeds the earnings limit, the Social Security Administration (SSA) will reduce their benefits by a fraction of what they earn. It might seem that the Administration would withhold a portion of each payment until satisfied. However, each monthly benefit is withheld until the obligation is satisfied.

Fortunately, all is not lost. The reduced amounts will be returned at full retirement age. Unlike reductions that consume each benefit until satisfied, the reimbursement will be gradually paid over time.

Example of Social Security and Working

Consider a 62-year-old single taxpayer who receives a monthly Social Security retirement benefit of $700. To stay active, they began working part-time for a local firm, where they earn $25,000 per year.

Because their 2022 income exceeds the earnings threshold by $5,440 ($25,000 - $19,560), the Social Security Administration will reduce their benefits by $2,720 ($1 for every $2 earned or $5,440/$2). The SSA withholds the first seven benefit payments and reduces the 8th payment by $540.

What Is Full Retirement Age?

For Social Security purposes, your full or normal retirement age is between age 65 and 67, depending on the year you were born. If, for example, your full retirement age is 67, you can start taking benefits as early as age 62, but your benefit will permanently be 30% less than if you wait until age 67.

If you can manage without receiving your Social Security benefits at full retirement age, you can wait until age 70. That will give you the maximum benefit each month.

There's no advantage to waiting past age 70 to start collecting benefits.

Social Security Income Limits

The Social Security Administration (SSA) reported in October 2021 that the estimated average monthly retirement benefit will be $1,827. While that regular monthly income helps, it's usually not enough to cover living expenses. That's one reason many people are working longer.

If you work, the money you bring home can affect your Social Security benefits—but the specifics depend on your age and how much you earn. Remember that, although your full retirement age might be 67, you can start receiving benefits at 62, even if you're still working.

But here's the catch: For the 2023 tax year, if you start benefits before full retirement age, you can only earn up to $21,240 ($19,560 for 2022) and still get your full benefits. Once you earn more than the limit, Social Security deducts $1 from your benefits for every $2 you earn.

In the year you reach full retirement age, Social Security becomes more forgiving. If you earn more than $56,520 in 2023 ($51,960 for 2022) it deducts $1 for every $3 you earn—but only during the months before you reach full retirement age. Once you reach full retirement age, you can earn any amount of money, and it won't reduce your monthly benefits.

Note, however, that any money deducted from your benefit is not permanently lost. After you reach full retirement age, Social Security will recalculate your benefit and increase it to account for the benefits that it withheld earlier.

70 million

The number of people expected to collect some type of Social Security benefit in 2023.

How Does Social Security Know?

You might wonder how the Social Security Administration keeps track of your work and your earnings. The answer: It doesn't. It's your responsibility to report how much you've made.

"The biggest thing to remember if you are working is to notify the Social Security Administration if you're going to earn wages in excess of the earnings threshold," says Matt Ahrens, an associate financial advisor at Integrity Advisory Group.

Otherwise, he notes, "They will not be notified of your earnings until you file your taxes the following year. And if you were receiving excess benefits, you can be fined, forced to pay back the excess, or receive lower future benefits."

Working Outside of the United States

If you retire and work outside the United States, the rules are different. If you are younger than full retirement age, Social Security will reduce your benefits for every month you work more than 45 hours in a job (or self-employment) that's not subject to U.S. Social Security taxes. That applies regardless of how much money you earn. These rules can get complicated, so you'll want to contact Social Security for advice on your particular situation.

Can You Collect Social Security at 62 and Still Work?

You can collect Social Security retirement benefits at age 62 and still work. If you earn over a certain amount, however, your benefits will be temporarily reduced until you reach full retirement age.

What Is Full Retirement Age?

Full retirement age is the age at which you become eligible to receive full benefits from Social Security. It is 66 years and two months for those born in 1955 and gradually increases to 67 for those born in 1960 and after.

How Much Can I Earn and Still Collect Social Security?

If you start collecting benefits before reaching full retirement age, you can earn a maximum of $21,240 in 2023 ($19,560 for 2022) and still get your full benefits. Once you earn more, Social Security deducts $1 from your benefits for every $2 earned.

The Bottom Line

If you paid into Social Security long enough to earn 40 credits and have reached your full retirement age, you can make as much money as you like without having your Social Security benefits reduced. If you start collecting benefits earlier and earn over a certain amount, a portion of your benefits will be withheld. But once you reach full retirement age, Social Security will recalculate your benefit to make up for the money it withheld earlier.

Article Sources
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  1. Social Security Administration. "Fact Sheet Social Security 2023 Social Security Changes," Page 1.

  2. Social Security Administration. "Social Security Credits."

  3. Social Security Administration. "Cost-of-Living Adjustment (COLA) Information for 2023."

  4. Social Security Administration. "Receiving Benefits While Working."

  5. Social Security Administration. "Receiving Benefits While Working."

  6. Social Security Administration. "Request to withhold taxes."

  7. Social Security Administration. "Starting Your Retirement Benefits Early."

  8. Social Security Administration. "Delayed Retirement Credits."

  9. Social Security Administration. "Fact Sheet Social Security 2023 Social Security Changes," Page 2.

  10. Social Security Administration. "Social Security Benefits Increase in 2023."

  11. Social Security Administration. “Your Retirement Benefit: How It’s Figured,” Page 1.

  12. Social Security Administration. "Your Payments While You Are Outside the United States," Page 14.

  13. Social Security Administration. “Retirement Benefits: Full Retirement and Age 62 Benefit by Year of Birth.”

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