Working Into Retirement: Can You Collect Social Security While Earning Income?

A common misconception is that claiming Social Security retirement benefits means you must stop working entirely. The reality is more nuanced. Many people wonder: Can I work full time and collect Social Security? The answer is yes—but with important caveats related to age and income thresholds.

How Work Income Affects Your Social Security Payments

The relationship between employment and Social Security benefits depends primarily on whether you’ve reached your Full Retirement Age (FRA). Once you hit FRA, there are essentially no restrictions. However, before reaching that milestone, the Social Security Administration applies earnings tests that can temporarily reduce your monthly payments.

Here’s what makes the situation interesting: working longer can actually increase your long-term benefit. Each year, the SSA reviews your earning history. If your current year ranks among your 35 highest-earning years on record, your benefit gets recalculated upward—and this adjustment is retroactive to January of that earnings year.

Understanding Your Full Retirement Age

Your FRA depends on your birth year:

• Born 1943-1954: Age 66
• Born 1955: Age 66 and 2 months
• Born 1956: Age 66 and 4 months
• Born 1957: Age 66 and 6 months
• Born 1958: Age 66 and 8 months
• Born 1959: Age 66 and 10 months
• Born 1960 or later: Age 67

This distinction matters because your FRA determines which earnings rules apply to you.

The Earnings Cap: What Counts and What Doesn’t

Before you reach full retirement age, claiming Social Security while maintaining work income triggers an earnings test. Not all income counts toward this limit—that’s crucial to understand.

Income that counts:

• Wages from employment
• Commissions
• Bonuses
• Vacation pay
• Net self-employment profits

Income that does NOT count:

• Pension distributions
• Annuities
• Interest and investment returns
• Veterans’ benefits
• Government or military retirement payments

For 2025, the annual earnings limit sits at $23,400—up from $22,320 in 2024. Once you exceed this threshold and you’re still below FRA, the SSA begins withholding benefits.

How Much Gets Withheld From Your Benefit?

The reduction formula varies depending on your proximity to full retirement age.

If you’re under FRA for the entire calendar year: For every $2 you earn above the $23,400 limit, $1 gets deducted from your annual benefits.

Consider this scenario: You earn $24,000, which is $600 over the limit. Your annual benefit would be reduced by $300 (half of the overage). If you earned $28,400 instead—$5,000 above the threshold—your annual benefits would drop by $2,500.

These withholdings happen monthly. Imagine you claimed at 62, expecting $900 monthly, but projected earnings of $28,400. Your first three benefit checks would be completely withheld ($2,700 total), with excess amounts returned the following year.

The year you reach FRA: Starting the month you hit your full retirement age, the formula changes dramatically. Now it’s $1 withheld for every $3 earned, and the earnings limit jumps to $62,160 for 2025 (up from $59,520 in 2024). Additionally, the SSA only counts earnings through the month before you reach FRA, not your entire year’s income.

Picture this: You’ll turn 67 in November 2025. Your monthly benefit is $900. You expect $78,200 total earnings for 2025, but $65,160 comes between January and October. Since $65,160 exceeds the $62,160 threshold by $3,000, your annual benefits reduce by $1,000. Your January and February checks would be withheld entirely ($1,800), then full payments resume in March. The $800 excess withholding gets repaid in 2026.

After reaching FRA: No earnings limit applies whatsoever. You receive your full benefit regardless of work income.

Recalculation and Benefit Restoration

Here’s the good news: withholdings aren’t permanent penalties. Once you reach your full retirement age, the SSA recalculates your benefit to account for any months in which benefits were reduced or suspended. This recalculated amount—typically higher—applies to all future payments. Additionally, excess amounts withheld are refunded the following tax year.

What About Spousal Benefits?

Yes, you can work full time and collect Social Security spousal benefits as well. The same earnings rules apply. If you haven’t reached full retirement age and your work income exceeds $23,400 annually, your spousal benefit may be partially or fully withheld.

Importantly, if your spouse is collecting before reaching their own FRA and is still employed, their earnings test can affect their benefit—which in turn impacts what you receive as a spouse. Once both spouses reach their respective FRAs, earnings become irrelevant to benefit calculations.

Planning Your Work and Benefits Strategy

Before deciding whether to work while collecting Social Security, calculate your expected benefit amount. This depends on your 35 highest-earning years and your claiming age. The SSA provides tools to estimate your retirement benefits, which then allows you to project how employment income might affect your payments.

For those easing into retirement or starting a side venture, understanding these mechanics transforms the decision from guesswork into strategy. Working longer strengthens your earning history, potentially delivering a higher permanent benefit once you reach full retirement age—while temporary reductions during the interim are ultimately temporary.