Yes, you can work and collect Social Security, but your benefits may be reduced if you earn above a certain amount before your full retirement age
If you have not yet reached your full retirement age, Social Security reduces your monthly benefit by $1 for every $2 you earn above an annual limit. For 2024, that limit is $23,400. In the year you reach full retirement age, the reduction changes to $1 for every $3 you earn above $62,400, but only for earnings before the month you turn full retirement age. Once you reach full retirement age, you can earn any amount with no reduction to your benefits.
The earnings limit applies only to work income — wages from a job or net income from self-employment. It does not include pensions, investment income, rental income, or other money you receive. Social Security counts only your earnings in the calendar year, so if you stop working in November, your December earnings do not count toward next year's limit.
Key Takeaways
- Before full retirement age, Social Security reduces your benefit $1 for every $2 you earn above $23,400 per year (2024 limit).
- The earnings limit does not explore once you reach your full retirement age, no matter how much you work.
- Only work income counts toward the limit — pensions, investments, and rental income do not affect your benefits.
- You must report your expected earnings to Social Security when you claim benefits, and update them if your income changes.
- Social Security recalculates your benefit at full retirement age to account for months when benefits were withheld.
How the earnings limit works before full retirement age
The reduction happens automatically — you do not have to do anything except report your earnings. If you earn $25,400 in a year and the limit is $23,400, you are $2,000 over. Social Security withholds $1,000 from your annual benefits ($2,000 ÷ 2). If your monthly benefit is $1,500, they might withhold two months of payments, or reduce each month's payment by about $83.
The withholding is temporary. When you reach full retirement age, Social Security recalculates your benefit to account for the months when payments were held back. You do not lose that money — your monthly benefit increases to make up for it. This is called a "recalculation," and it happens automatically.
You need to tell Social Security about your work income. When you first claim benefits, you report your expected earnings for that year. If your actual earnings are different, you can update your report. Social Security uses this information to decide whether to withhold benefits before they are paid to you, rather than waiting until the next year to settle up.
What counts as earnings and what does not
Social Security counts wages from any job, whether full-time or part-time, and net income from self-employment. It does not count bonuses, commissions, or vacation pay you earned in a previous year — only money you actually earn in the current calendar year.
These do not count toward the earnings limit: pensions (including government pensions), annuities, investment income, interest, dividends, capital gains, rental income, royalties, or money from selling property. If you retired from one job and now collect a pension while working at another job, only the new job's wages count. Your pension does not reduce your Social Security benefit.
If you are self-employed, Social Security counts your net profit — the amount left after business expenses. You report this on your tax return, and Social Security uses that figure. If you own a business but do not actively work in it, the income from that business usually does not count as earnings.
Working after you reach full retirement age
Once you reach your full retirement age, the earnings limit disappears entirely. You can work full-time, earn any amount, and receive your full Social Security benefit with no reduction. Your age for full retirement age depends on your birth year: it ranges from 66 to 67 for people born between 1943 and 1960, and is 67 for anyone born in 1960 or later.
Continuing to work after full retirement age can actually increase your future benefits. If you delay claiming Social Security beyond full retirement age, your monthly benefit grows by about 8% per year until age 70. If you have already claimed and are working, your earnings do not affect your benefit, but you may want to ask Social Security whether suspending your benefits temporarily could result in a higher payment later.
Reporting your earnings to Social Security
When you claim Social Security, you must estimate your earnings for the rest of that calendar year. Be honest about this estimate — if you underestimate and earn more than you reported, Social Security will adjust your benefits later and may ask you to repay the overpayment.
If your job situation changes during the year — you get a raise, lose a job, or start a new one — contact Social Security to update your earnings estimate. You can reach them at 1-800-772-1213 (TTY 1-800-325-0778) or visit your local Social Security office. Updating your estimate helps Social Security withhold the correct amount and avoids a large adjustment at the end of the year.
At the end of each year, Social Security receives your W-2 forms or self-employment tax information from the IRS. They compare your actual earnings to what you reported and adjust your benefits if needed. If you earned less than you estimated, they may owe you back payments. If you earned more, they will withhold additional benefits or ask you to repay an overpayment.
Special rules for the year you claim benefits
The year you first claim Social Security has different rules. If you claim before your full retirement age, Social Security uses a higher earnings limit for the months before you claim. For example, if you claim in June 2024, the limit applies only to earnings from June through December. Earnings from January through May do not count, even if they were high.
This is called the "year of entitlement" rule, and it can help if you plan to stop working partway through the year. Talk to Social Security about the timing if you are thinking about claiming mid-year.
How working affects your taxes on Social Security benefits
Work income can increase the amount of your Social Security benefits that are taxable. If your combined income — adjusted gross income plus nontaxable interest plus half your Social Security benefits — exceeds certain thresholds, you may owe federal income tax on part of your benefits. The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly.
This is separate from the earnings limit. You can still receive your full benefit (no withholding) while owing taxes on it. A tax professional or your local IRS office can help you understand whether your work income will trigger taxation of your benefits.
Frequently Asked Questions
If I work and my benefits are reduced, do I lose that money forever?
No. When you reach full retirement age, Social Security recalculates your benefit to account for the months when payments were withheld. Your monthly benefit increases to make up for it. You do not lose the money — you receive it as higher payments later.
Can I work part-time and still collect Social Security?
Yes. Part-time work counts the same way as full-time work — only the total amount you earn in the year matters, not how many hours you work. If you earn below the annual limit, your benefits are not reduced at all.
What if I am self-employed — how do I report my earnings?
Report your net profit (income minus business expenses) to Social Security when you claim benefits. At the end of the year, Social Security receives your Schedule C from the IRS and compares it to what you reported. Update your earnings estimate if your business income changes significantly during the year.
Does my pension reduce my Social Security benefit?
No. Pensions do not count toward the earnings limit. However, if you receive a government pension from work not covered by Social Security, a different rule called the Government Pension Offset may reduce your spousal or survivor benefits. This is separate from the earnings limit.
What happens if I earn more than I reported?
Social Security will adjust your benefits at the end of the year when they receive your tax information from the IRS. If you earned significantly more than you estimated, they may withhold additional benefits or ask you to repay an overpayment. Contact them right away if you think your earnings will be much higher than you reported.