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

If you have not yet reached your full retirement age, Social Security reduces your benefit by $1 for every $2 you earn above a yearly limit. For 2024, that limit is $23,400. The reduction applies only to earnings before the month you reach full retirement age — once you hit that age, there is no earnings limit at all, and you can work and collect your full benefit with no reduction.

If you reach full retirement age during the year, a different rule applies for that year only. Social Security reduces your benefit by $1 for every $3 you earn above $6,240, but only counting earnings before the month you reach full retirement age. After that month, the earnings limit disappears entirely.

The yearly limits change each year. Social Security announces the new amounts in October for the following year, so check the official Social Security website or call 1-800-772-1213 to confirm the current limit before you plan your work.

Key Takeaways

  • Before full retirement age, you lose $1 in benefits for every $2 you earn above the yearly limit (currently $23,400 for 2024).
  • Once you reach full retirement age, you can earn any amount without losing any Social Security benefit.
  • Only wages and self-employment income count toward the earnings limit — not pensions, investments, or rental income.
  • The yearly limit changes annually, so confirm the current amount before you decide how much to work.
  • Social Security uses your reported earnings to calculate the reduction, so accurate tax reporting matters.

What counts as earnings and what does not

Social Security counts only wages from a job and net income from self-employment. If you are an employee, your employer reports your wages to Social Security through your tax return. If you are self-employed, you report your net profit (income minus business expenses) on Schedule C of your tax return.

These do not count toward the earnings limit: pensions (whether from a government job or a private employer), investment income, interest, dividends, rental income, capital gains, or money from selling property. Bonuses and severance pay count as wages in the year you receive them. Vacation pay counts in the year you earn it, not the year you take the time off.

If you work for a railroad, railroad retirement benefits follow different rules — contact the Railroad Retirement Board directly at 1-877-772-5772 for your specific situation.

How the reduction is calculated and when it takes effect

Social Security does not reduce your benefit month by month as you earn. Instead, they estimate your yearly earnings when you first claim, and they adjust your monthly payment based on that estimate. If you earn more than expected, they may reduce your payment later. If you earn less, you may receive a larger payment or a refund of what they withheld.

The reduction happens automatically — you do not have to report your earnings to Social Security each month. However, you must report your expected earnings when you first claim benefits. If your earnings change during the year, you can contact Social Security to update your estimate, which may adjust your monthly payment.

At the end of the year, Social Security compares what you actually earned (from your tax return) to what you reported. They settle any difference by adjusting future payments or sending you a refund. This process can take several months, so do not be alarmed if your payment changes in the months after you file your taxes.

Working after you reach full retirement age

Once you reach full retirement age, the earnings limit no longer applies. You can work full-time, earn any amount, and receive your full Social Security benefit with no reduction. This is true whether you are working as an employee or self-employed.

Reaching full retirement age does not happen automatically on a birthday — you must have already claimed your Social Security benefit. If you have not yet claimed, you can continue working and delay claiming, which increases your benefit amount by about 8 percent per year until age 70. If you have already claimed and then reach full retirement age, the earnings limit straightforward stops explore.

Some people delay claiming specifically so they can work longer without the earnings limit. This strategy increases your monthly benefit when you do claim, because you are claiming at an older age. Talk to Social Security about whether delaying makes sense for your situation.

Reporting your earnings to Social Security

You report your earnings through your annual tax return. Social Security receives this information from the Internal Revenue Service and uses it to calculate any reduction to your benefit. You do not file a separate earnings report with Social Security.

When you first claim benefits, Social Security will ask you to estimate your earnings for the rest of that year. Be as accurate as you can, because a large underestimate may mean your payment is too high and you will owe money back later. If your earnings change — for example, if you lose a job or take on more work — you can call Social Security at 1-800-772-1213 to update your estimate.

Keep records of your earnings, especially if you are self-employed. Social Security matches your reported earnings to your tax return, and discrepancies can delay your payment or trigger a review.

Examples of how the earnings limit works

Example 1: Before full retirement age. You are 64 and collecting Social Security. Your full retirement age is 67. In 2024, you earn $35,400 from a job. The earnings limit is $23,400. You earned $12,000 over the limit ($35,400 − $23,400). Social Security reduces your benefit by $1 for every $2 over the limit, so the reduction is $6,000 ($12,000 ÷ 2). If your monthly benefit is $1,500, Social Security withholds $6,000 from your annual benefits, which means you receive no payment for four months and then resume full payments.

Example 2: Reaching full retirement age during the year. You reach full retirement age in June 2024. From January through May, the earnings limit is $6,240 with a $1-for-$3 reduction. From June onward, there is no limit. You earn $2,000 from January through May and $8,000 from June through December. Only the $2,000 counts toward the limit, and it is under $6,240, so there is no reduction. You receive your full benefit for all 12 months.

Example 3: After full retirement age. You reached full retirement age last year and are now 68. You earn $50,000 from a consulting business. There is no earnings limit, so Social Security reduces your benefit by $0. You receive your full monthly benefit regardless of how much you earn.

When your work capacity changes

If a health condition is preventing you from working, you may want to explore whether you are may be able to access for Social Security Disability Insurance (SSDI) instead of retirement benefits. SSDI has different rules and does not have an earnings limit once you are approved — though it does have a trial work period with special earnings rules that allow you to test your work capacity without losing benefits.

Speak with your doctor about your work capacity and any limitations you are experiencing. Then contact Social Security at 1-800-772-1213 to learn whether SSDI might be an option for your situation. You can also visit the Social Security website to read about how SSDI works and what the medical requirements are.

Frequently Asked Questions

Do I have to tell Social Security if I start working?

You do not have to call them, but you should update your earnings estimate if your income changes significantly from what you reported when you claimed. This helps Social Security adjust your payment correctly and avoids a large adjustment later when your tax return is filed. Call 1-800-772-1213 to update your estimate.

What if I earn money from a side gig or freelance work?

Freelance income counts as self-employment income and is subject to the earnings limit if you have not reached full retirement age. You report it on Schedule C of your tax return. Keep records of your income and expenses, because Social Security uses your reported net profit (income minus business expenses) to calculate the reduction.

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

Yes. Part-time earnings count toward the limit the same way full-time earnings do. If you earn less than the yearly limit, there is no reduction. If you earn more, the reduction applies based on how much you are over the limit. Once you reach full retirement age, part-time work does not affect your benefit at all.

What happens if I earn more than I reported?

Social Security will discover the difference when your tax return is filed. They will recalculate your reduction based on your actual earnings and adjust your future payments or send you a refund if they withheld too much. This process takes time, so do not be surprised if your payment changes several months after you file taxes.

Does my spouse's earnings affect my Social Security?

No. Your spouse's earnings do not count toward your earnings limit. However, if your spouse is also collecting Social Security and has not reached full retirement age, their earnings are subject to their own earnings limit. Each person's benefit is calculated separately.