How are your Social Security Benefits reduced – affected if you are still working?

You can work while you receive Social Security retirement (or survivors) benefits. When you do, it could mean a higher benefit for you in the future.

Each year we review the records for all working Social Security recipients. If your earnings for the prior year are higher than one of the years we used to compute your retirement benefit, we will recalculate your benefit amount. We pay the increase retroactive to January the year after you earned the money.

Higher benefits can be important to you later in life and increase the future benefit amounts your family and your survivors could receive.

Note: If you receive survivors benefits, the additional earnings could help make your retirement benefit higher than your current survivors benefit.

How much can I earn and still get benefits?

If you are younger than full retirement age and make more than the yearly earnings limit, your earnings may reduce your benefit amount. (Full retirement age is 66 for people born between 1943 and 1954. Beginning with 1955, two months are added for every birth year until the full retirement age reaches 67 for people born in 1960 or later.)

  • If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2018, that limit is $17,040.
  • In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2018, the limit on your earnings is $45,360 but we only count earnings before the month you reach your full retirement age.

Note: If your earnings will be over the limit for the year but you will be retired for part of the year, we have a special rule that applies to earnings for one year. The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings.

When you reach full retirement age:

Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn. We will recalculate your benefit amount to leave out the months when we reduced or withheld benefits due to your excess earnings.

Publication 10063  Special Payments after retirement, bonuses, vacation page, commissions, etc.

If you are working outside the United States

If you work outside the United States, the rules for receiving benefits while you are working are different. For more information, please read Work Outside the United States.

When you should contact us

If you are not already receiving benefits, be sure to contact us at the beginning of the year you reach full retirement age. Even if you are still working, you may be able to receive some or all of your benefits for the months before you reach full retirement age. SSA.Gov

Use our Retirement Age Calculator to find your full retirement age based on your date of birth.

Use our Retirement Earnings Test Calculator to find out how much your benefits will be reduced.

What counts as earnings:

When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net earnings if you’re self-employed. We include bonuses, commissions, and vacation pay. We don’t count pensions, annuities, investment income, interest, veterans, or other government or military retirement benefits.

Your benefits may increase when you work:

As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings. However, we will check your record every year to see whether the additional earnings you had will increase your monthly benefit. If there is an increase, we will send you a letter telling you of your new benefit amount.

When you’re ready to apply for retirement benefits, use our online retirement application, the quickest, easiest, and most convenient way to apply.

If you need to report a change in your earnings after you begin receiving benefits:

If you receive benefits and are under full retirement age and you think your earnings will be different than what you originally told us, let us know right away. You cannot report a change of earnings online. Please call us at 1-800-772-1213 (TTY 1-800-325-0778) between 7 a.m. to 7 p.m., Monday through Friday, or contact your local Social Security office. SSA.Gov *


Examples: How We Deduct Earnings From Benefits

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2 comments on “How are Social Security Benefits reduced if you are working?

  1. I will be making $30,000 this year (including unemployment benefits).

    I was born August 1954, so full retirement age would be at 66 in August 2020.

    If I start social security Oct.1 this year, age 65, I see that my benefits will be temporarily reduced by $6,180 for the year.

    Is this prorated so that they would only be reduced by 1/4 of this amount since only getting benefits for 3 months?

    • Unemployment income doesn’t count

      We don’t have enough information to truly answer your question. You may send all relevant documents to us privately and we can do further research…

      Please review pages 1 – 3 of publication 10069 How work affects benefits for general information and examples.

      Try also the Retirement Earnings Test Calculator

      I do not know what your earnings are BEFORE the test… This answer is probably meaningless:

      If all your earnings occur before the first month for which you could receive benefits (your month of entitlement), then your benefits would not be affected by the retirement earnings test. Otherwise your benefits may be affected by the monthly earnings test. The monthly earnings exempt amount under this test is $1,470.00 in 2019.

      Information you submitted
      Birth date: 6/2/1954
      Estimated earnings in 2019: $33,000.00
      Monthly benefit in 2019: $1,421.00
      First entitled in 2019? Yes

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