People younger than full retirement age (67 for many) who are receiving Social Security retirement benefits can earn up to $21,240 in 2023 from work before the Social Security Administration reduces their benefits. There is no earnings cap after hitting full retirement age.
How much you can earn while on Social Security
Whether the Social Security Administration penalizes you for working while you’re receiving Social Security retirement benefits depends on your age and how much you earn. Here are some key things to know about how the penalties work.
If you’re younger than full retirement age during the whole year
The penalty: 50% of anything you earn over the cap.
How it works: The Social Security Administration deducts $1 from your Social Security check for every $2 you earn above $21,240 (this is the income limit for 2023). For example, $22,240 of earnings would generate a $500 reduction in a person’s Social Security retirement benefit for the year.
However, you can avoid the penalty and still get full Social Security checks if for the remainder of the year after you retire you earn less than $1,770 a month and don’t spend more than 45 hours a month on a small business (15 hours if it’s a “highly skilled occupation”).
After that first year, you’re subject to the annual limit until you hit full retirement age.
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If this is the year you will hit full retirement age
The penalty: 33% of anything over the cap.
How it works: The Social Security Administration deducts $1 from your Social Security check for every $3 you earn in the months before your birthday above $56,520 (this is the limit for people who hit full retirement age in 2023).
This special rule exists because sometimes people who retire in the middle of the year have already earned more than the limit.
However, you can avoid a penalty and still get full Social Security checks for the remainder of the year after you retire you earn less than $4,710 a month and don’t spend more than 45 hours a month on a small business (15 hours if it’s a “highly skilled occupation”).
After you hit full retirement age
Once you hit full retirement age, there is no limit on what you can earn while collecting Social Security retirement benefits.
The Social Security Administration considers these things as income when determining whether you exceeded the income limit.
Wages earned by working for someone else.
Net earnings from self-employment.
Contributions you make to a pension or retirement plan if the contribution is included in your gross wages.
These things don’t count as income when determining whether you exceeded the income limit:
Other government benefits.
Things to remember about working while on Social Security
Here are three things to keep in mind if you’re thinking about working while receiving Social Security retirement benefits.
Know what your full retirement age is
This is the age at which you are entitled to receive 100% of your Social Security retirement benefit. If you elect to start receiving Social Security retirement benefits before you reach full retirement age, the Social Security Administration can permanently reduce your monthly check by up to 30%.
Your full retirement age is also the age at which there’s no cap on what you can earn while receiving benefits.
The Social Security Administration determines your full retirement age based on when you were born. For many (but not all) people, full retirement age is 67.
Full retirement age for Social Security
If you start receiving benefits at 62, your retirement benefit is reduced by…
Understand how you pay the penalties
If you incur a penalty for earning too much, the Social Security Administration gets its payment by withholding your benefits.
The Social Security Administration withholds entire checks (no partial reductions) and refunds any overages the subsequent year.
For example, if you retired early and your retirement benefit is normally $1,200 per month but you incurred a $500 penalty, the Social Security Administration may withhold your entire January 2024 payment of $1,200 to recoup the $500 penalty from 2023. In January 2025, it would refund the extra $700 it took.
You may get some back
Your benefit may increase later if you incur penalties before you reach full retirement age.
If you retire early and the Social Security Administration withholds some of your benefits because you earned too much, it recalculates your benefit to reincorporate those withheld benefits when you hit full retirement age, meaning you could get a higher benefit later.
For spouses and survivors who receive benefits because they have children in their care who are minors or have disabilities, there is no increase in benefits at full retirement age if benefits were withheld because of work.