The earnings limit depends on whether you have reached your full retirement age
If you are under your full retirement age for the entire year, Social Security reduces your benefit by $1 for every $2 you earn above the annual limit. For 2024, that limit is $23,400. If you reach full retirement age partway through the year, a different limit applies only to earnings before the month you reach that age — $62,160 for 2024, with a $1 reduction for every $3 earned above it.
Once you reach your full retirement age, there is no earnings limit at all. You can work and earn as much as you want without any reduction to your Social Security benefit. This is true for the rest of your life.
The earnings limits change each year. Social Security announces the new amounts in October for the following year. You can find the current limits on the Social Security Administration website or by calling 1-800-772-1213.
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 figure).
- The earnings limit is higher in the year you reach full retirement age, but only applies to income earned before that month.
- Once you reach full retirement age, you can earn unlimited income without any reduction to your benefit.
- Only wages and self-employment income count toward the limit — investment income, pensions, and rental income do not.
- Social Security counts earnings for the year you earn them, not the year you receive payment.
What counts as earnings and what does not
Social Security only counts wages from employment and net income from self-employment. If you are an employee, your employer reports your wages to Social Security, and those wages count toward the limit. If you are self-employed, you report your net profit (income minus business expenses) on your tax return, and that amount counts.
Many types of income do not count toward the earnings limit. Investment income — dividends, interest, capital gains — does not count. Rental income does not count. Pensions, annuities, and distributions from retirement accounts do not count. Bonuses, commissions, and severance all count as wages, but only in the year you actually receive them.
Deferred compensation also matters. If you work in 2024 but do not receive payment until 2025, Social Security counts it in 2025, not 2024. This can be useful if you are trying to stay under the limit in a particular year.
How Social Security calculates the reduction
The reduction is straightforward arithmetic. Suppose you are under full retirement age in 2024, you earn $30,000, and your monthly benefit is $1,500. You are $6,600 over the limit of $23,400. Social Security divides that by 2, which equals $3,300. Your annual benefit of $18,000 is reduced by $3,300, leaving $14,700 for the year.
Social Security applies this reduction by withholding benefits month by month. In the example above, you would receive no benefit for the first 2.75 months of the year, then your full $1,500 starting in April. The exact timing depends on when you report your earnings and how Social Security processes the information.
You do not have to repay the withheld amount. It is simply not paid to you. However, Social Security recalculates your benefit at full retirement age to account for the months you did not receive payment, which can result in a slightly higher monthly benefit going forward.
Reporting your earnings to Social Security
You are responsible for telling Social Security about your earnings. You can report them online at ssa.gov, by phone at 1-800-772-1213, or by visiting a local Social Security office. You do not have to wait until the end of the year — you can report as you go, which helps Social Security adjust your payments more accurately.
If you are self-employed, you will also report your net profit on your tax return. Social Security gets this information from the IRS, so if your tax return shows self-employment income, Social Security will know about it even if you do not call and report it separately.
If you underreport your earnings, Social Security will eventually discover the discrepancy through tax records or employer reports. You will owe back the benefits you should not have received, plus interest. It is simpler and safer to report accurately from the start.
Working before you claim Social Security
If you have not yet started collecting Social Security but you are old enough to claim, you can work without any earnings limit. The limit only applies once you have started receiving benefits.
However, if you claim Social Security before your full retirement age, your benefit amount is permanently reduced. The reduction is about 6.7% per year for each year before full retirement age that you claim. This is separate from the earnings limit — it is a permanent change to your benefit calculation.
For this reason, many people delay claiming until full retirement age or beyond, especially if they plan to keep working. Delaying also increases your benefit by about 8% per year, which can offset the reduction from early claiming.
Special rules for the year you reach full retirement age
The year you reach full retirement age has its own earnings limit that applies only to income earned before the month you reach that age. For 2024, this limit is $62,160, with a $1 reduction for every $3 earned above it. Starting the month you reach full retirement age, no limit applies for the rest of the year.
This matters if you reach full retirement age partway through the year and you are still working. Suppose you reach full retirement age in June 2024 and you earn $70,000 for the year. Only the income you earned from January through May counts toward the $62,160 limit. If you earned $50,000 during those five months, you are under the limit and no reduction applies. The $20,000 you earn from June onward does not count at all.
Planning your work and benefits around the earnings limit
If you are under full retirement age and you want to minimize the reduction to your benefit, you have a few options. You can reduce your hours or take time off work to stay under the annual limit. You can delay claiming Social Security until you reach full retirement age, at which point the limit disappears. You can also ask your employer if any of your compensation can be deferred to the following year, which moves it outside the current year's earnings calculation.
Some people claim Social Security early and work part-time, accepting the earnings reduction as a trade-off for receiving some benefit now rather than waiting. Others delay claiming and work full-time, building up a higher benefit for later. The right choice depends on your health, your family history, your financial needs, and how long you expect to live.
A financial advisor or a Social Security representative can walk through your specific situation and show you the numbers for different claiming ages and work levels. This is worth doing before you claim, because the decision is hard to undo.
Frequently Asked Questions
Does my spouse's earnings affect my Social Security benefit?
No. Your spouse's earnings do not count toward your earnings limit. Each person who collects Social Security has their own separate limit. However, if your spouse has not yet claimed and is still working, that affects when and how much they can claim later.
What if I work for myself and my income varies month to month?
Social Security counts your net self-employment income for the entire year, not month by month. If you have a slow month or two but a strong year overall, you still count the full year's total against the limit. You report this amount on your tax return, and Social Security gets it from the IRS.
Can I work part-time and still collect Social Security?
Yes. There is no rule against part-time work. The only question is whether your earnings stay under the annual limit. If you earn $20,000 and the limit is $23,400, you are fine. If you earn $30,000, your benefit is reduced by $3,300 for the year.
If I work and my benefit is reduced, do I get that money back later?
You do not get a refund, but Social Security does recalculate your benefit at full retirement age to account for the months you did not receive payment. This can result in a modestly higher monthly benefit going forward, but it does not make up for the full amount withheld.
What happens if I earn more than expected and go over the limit?
Report the higher earnings to Social Security as soon as you know about them. Social Security will recalculate your benefit and adjust your payments. If you have already received benefits you should not have, you will owe them back, but reporting promptly keeps the overpayment smaller and shows good faith.