The earnings limit depends on whether you have reached full retirement age

If you are under full retirement age and collecting Social Security retirement benefits, the Social Security Administration (SSA) reduces your benefit by $1 for every $2 you earn above a yearly limit. For 2024, that limit is $23,400. Once you reach full retirement age, there is no earnings limit — you can earn as much as you want without losing benefits.

The year you reach full retirement age has a different rule. From January through the month before you turn full retirement age, SSA reduces your benefit by $1 for every $3 you earn above $62,160 (for 2024). Only earnings before the month you reach full retirement age count toward this limit. Starting the month you reach full retirement age, no reduction applies.

These dollar amounts change each year. The SSA publishes updated limits in October or November for the following year, so check their website or your annual statement if you are planning to work.

Key Takeaways

  • If you are under full retirement age, you lose $1 in benefits for every $2 you earn above $23,400 per year (2024 limit).
  • In the year you reach full retirement age, a different limit applies ($62,160 for 2024) until the month you turn full retirement age.
  • Once you reach full retirement age, you can earn unlimited income without any reduction to your Social Security benefits.
  • Only wages and self-employment income count toward the earnings limit — not pensions, investment income, or rental income.
  • The SSA updates earnings limits annually, so the amounts you see this year will change next year.

What counts as earnings and what does not

The SSA only counts wages from employment and net income from self-employment. If you are an employee, your W-2 wages count. If you are self-employed, your net profit (after business expenses) counts, not your gross revenue.

These do not count toward the earnings limit: pensions, annuities, investment income, interest, dividends, capital gains, rental income, royalties, or money from selling property. Bonuses and commissions count as wages in the year you receive them. Vacation pay counts in the year you receive it, even if you earned it in a previous year.

If you work for a family business or are a partner in a business, the SSA may count your income differently depending on how much work you actually do. Report all income honestly on your tax return — the SSA cross-checks with the IRS.

How the earnings reduction actually works

The reduction is not a penalty. SSA temporarily withholds benefits, and you are not losing money permanently. When you reach full retirement age, SSA recalculates your benefit amount to account for the months benefits were withheld. You receive a higher monthly payment for the rest of your life to make up for it.

Here is a concrete example: suppose you are 63, your full retirement age is 67, and your monthly benefit is $1,500. You earn $30,000 in a year. You are $6,600 over the $23,400 limit. SSA withholds $3,300 (half of $6,600). If you would normally receive $18,000 in benefits that year ($1,500 × 12 months), SSA pays you $14,700 instead. When you turn 67, your monthly benefit increases to account for those withheld months.

You do not have to repay the withheld amount. The SSA handles the adjustment automatically when you reach full retirement age.

Reporting your earnings to Social Security

You must report your earnings to SSA if you expect to earn more than the yearly limit. You can report online through your my Social Security account at ssa.gov, by phone at 1-800-772-1213, or by visiting a local Social Security office.

SSA also receives wage information from the IRS when you file your tax return. If your reported earnings do not match your tax return, SSA will contact you. It is better to report early and accurately than to have a mismatch later.

If you are self-employed, report your expected net income for the year. You can update your report if your actual earnings turn out to be different. Keep records of your income and expenses in case SSA asks for documentation.

When you turn full retirement age mid-year

If you reach full retirement age partway through the year, only your earnings before the month you turn full retirement age count toward the limit. Earnings from the month you reach full retirement age onward do not count at all.

For example, if you turn 67 in June 2024, your earnings from January through May count toward the $62,160 limit (the limit for the year you reach full retirement age). Your earnings from June onward do not count toward any limit. This can be a good time to increase your work hours if you have been holding back.

Deciding whether to work while collecting benefits

The earnings limit is not the only thing to consider. If you claim benefits before full retirement age, your monthly benefit is permanently reduced compared to what you would receive if you waited. Working and earning above the limit does not change this permanent reduction — it only causes temporary withholding.

Some people claim early and work anyway because they need the income now. Others claim early, stay under the earnings limit, and plan to work more once they reach full retirement age. A few claim early, work above the limit, accept the temporary withholding, and rely on the higher recalculated benefit later. There is no single right choice — it depends on your situation.

If you have not claimed benefits yet and are still working, you might consider waiting until full retirement age to claim. This avoids the earnings limit entirely and gives you a higher monthly benefit for life.

Special rules for the year you claim benefits

If you claim benefits partway through the year, SSA uses a different rule for that first year. Instead of explore the annual earnings limit, SSA withholds $1 in benefits for every $2 you earned in the months before you claimed. This can result in a smaller withholding than the annual limit would produce.

For example, if you claim benefits in September and earned $20,000 from January through August, SSA applies the monthly rule to those eight months of earnings. You may owe less in withholding than you would under the annual limit. SSA will explain which rule applies to you when you claim.

Frequently Asked Questions

Can I work part-time and still collect Social Security?

Yes. If you are under full retirement age and earn less than the yearly limit ($23,400 for 2024), you collect your full benefit with no reduction. If you earn more, SSA reduces your benefit by $1 for every $2 over the limit. Part-time work that stays under the limit is a common way to supplement Social Security without triggering a reduction.

What happens if I earn more than the limit and do not report it?

SSA receives wage information from the IRS when you file your tax return. If your actual earnings exceed what you reported, SSA will adjust your benefits and may ask you to repay the overpayment. It is better to report accurately upfront. If your earnings change during the year, you can update your report.

Does my spouse's earnings affect my Social Security benefit?

No. The earnings limit applies only to the person collecting benefits. Your spouse's income does not count toward your limit, and your earnings do not count toward theirs. Each person reports their own earnings separately.

If I work and lose benefits to the earnings limit, do I get that money back?

Yes, but not when ready. When you reach full retirement age, SSA recalculates your benefit to account for the months it was withheld. Your monthly payment increases for the rest of your life. You are not losing money — the withholding is temporary.

What if I am self-employed — do I report gross income or net income?

Report net income (revenue minus business expenses). If you earned $50,000 in gross revenue but had $15,000 in expenses, you report $35,000. Keep records of your expenses in case SSA asks for documentation. If you are unsure how to calculate net income, a tax professional can help.