Work and Social Security: What Reduces Your Payment

If you receive Social Security retirement or survivor benefits before your full retirement age, your monthly payment is reduced by $1 for every $2 you earn above an annual limit. The limit changes each year — in 2024 it is $23,400, but you should check the current year's figure on the Social Security Administration website before you take a job or increase your hours.

The earnings limit applies only in the years before you reach your full retirement age. Once you turn your full retirement age, you can earn any amount without losing benefits. The year you reach full retirement age, the limit is higher ($62,160 in 2024), and the reduction applies only to earnings before the month you turn that age.

The reduction is temporary — it affects only your current payments, not your future benefit amount. When you reach full retirement age, your benefit is recalculated to account for the months you did not receive a payment, so you receive a higher monthly amount going forward.

Key Takeaways

  • Before your full retirement age, Social Security reduces your benefit by $1 for every $2 you earn above the annual limit, which is $23,400 in 2024.
  • The earnings limit does not explore once you reach your full retirement age, no matter how much you work.
  • Earnings that cause a reduction do not permanently lower your benefit — your payment increases when you reach full retirement age to account for the months you did not receive money.
  • Self-employment income, investment income, and pensions do not count toward the earnings limit; only wages and net self-employment earnings count.
  • You must report your earnings to Social Security, and the agency uses your tax return to verify the amount you reported.

What Counts as Earnings

Only wages you earn from work and net income from self-employment count toward the earnings limit. If you are an employee, your employer reports your wages to Social Security through your tax withholding. If you are self-employed, you report net earnings — the amount left after business expenses — on your tax return.

Income that does not count includes investment returns, rental income, pensions, annuities, capital gains, interest, and dividends. Bonuses, commissions, and vacation pay all count as earnings in the year you receive them, even if they are for work done in a previous year. Sick pay and severance also count.

If you work for a business you own, Social Security counts your net profit as self-employment income. You report this on Schedule C of your tax return. The agency uses your tax return to verify earnings you report, so the amount you tell Social Security should match what you file with the IRS.

How to Report Your Earnings

You are required to report your earnings to Social Security. You can report them online through your my Social Security account, by phone at 1-800-772-1213, or by mail using Form SSA-777 (the Earnings Test Report). You should report your earnings as soon as you know what you will earn for the year, not wait until tax time.

Social Security will then use your federal tax return to verify the amount you reported. If there is a difference between what you reported and what appears on your tax return, the agency will contact you. If you underreported your earnings, your benefits may be reduced further, and you may owe back payments.

If you expect to earn more than the annual limit, report this before you start work so Social Security can adjust your payments in advance. This prevents you from receiving an overpayment that you would have to repay later.

The Year You Reach Full Retirement Age

The earnings limit is higher in the year you reach your full retirement age. In 2024, the limit is $62,160 for earnings before the month you turn that age. Once you reach your full retirement age, the limit no longer applies, and you keep your full benefit no matter how much you earn.

If you reach full retirement age in June, for example, earnings from January through May count toward the limit, but earnings from June onward do not. Social Security counts only the earnings you receive before the month you reach full retirement age, not the work you do before that month.

How Your Benefit Increases After Full Retirement Age

When you reach your full retirement age, Social Security recalculates your benefit to account for the months you did not receive a payment because of the earnings limit. The agency adds those months back into your benefit calculation, which increases your monthly payment going forward.

This recalculation is automatic — you do not have to request it. The increase takes effect the month after you reach full retirement age. The longer you worked and the more your earnings exceeded the limit, the larger your future benefit increase will be.

Working While Receiving Survivor Benefits

If you receive benefits as a spouse or child of a retired, disabled, or deceased worker, the same earnings limit applies to you. Your benefit is reduced by $1 for every $2 you earn above the annual limit, and the reduction ends when you reach your full retirement age.

If you are a widow or widower, the earnings limit applies until you reach your full retirement age. If you are a child, the limit applies until you turn 18 (or 19 if you are in high school full-time). Disabled adult children have different rules — their benefits do not have an earnings limit, but they cannot earn more than $1,550 per month (in 2024) without losing their disability status.

Frequently Asked Questions

If I work part-time and earn $20,000, will my benefits be reduced?

Yes, if you are under full retirement age. Your earnings exceed the 2024 limit of $23,400 by $0, so no reduction applies. If you earned $25,000, you would exceed the limit by $1,600, and your benefit would be reduced by $800 ($1 reduction for every $2 earned above the limit).

Do I have to tell Social Security about a job I just started?

Yes. You must report your expected earnings so Social Security can adjust your payments if needed. Report before you start work or as soon as you know your expected annual earnings. This prevents overpayments you would have to repay later.

What happens if I earn more than I reported?

Social Security will verify your earnings against your tax return. If you earned more than you reported, your benefits will be reduced further, and you may owe back payments to the agency. Report your best estimate upfront to avoid this.

Can I work unlimited hours once I reach full retirement age?

Yes. Once you reach your full retirement age, there is no earnings limit. You can work full-time, part-time, or start a business without any reduction to your Social Security benefit, regardless of how much you earn.

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

No. The earnings limit applies only to the person who receives the benefit. Your spouse's earnings do not affect your benefit amount, and your earnings do not affect theirs.