DEFINITION of 'Outside Earnings'

Income that temporarily reduces a retired individual's Social Security benefits. Outside earnings from continued work only reduce Social Security benefits for individuals who retire before the age the Social Security Administration defines as full retirement age (currently 65 to 67, depending on year of birth). Retirees who see their benefits reduced because of outside earnings may see these lost benefits restored if they live long enough.

BREAKING DOWN 'Outside Earnings'

Social Security benefits are not reduced by outside earnings until income exceeds an annual threshold. They also don't lower Social Security benefits for individuals who are full retirement age or older. Rules about outside earnings mean that individuals must carefully consider decisions about employment and retirement age if they want to maximize their Social Security benefits.

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