For millions of retirees in the United States, Social Security is an essential source of income. However, there's a rule that many people don't know: if you earn too much while receiving these benefits, you could lose part of the money you worked so hard to earn.
What is the income limit?
The Social Security Administration (SSA) sets an income cap for those who receive benefits before reaching full retirement age (FRA). This age depends on your year of birth, but for most people it's now 67 years old.
If you decide to claim your benefits before reaching that age and you also keep working, there's a maximum amount you can earn without having money deducted from your monthly checks.
For the year 2025, the limits are:
- If you haven't reached full retirement age yet, you can earn up to $23,400 per year. If you exceed that amount, $1 is deducted for every $2 you earn above the cap.
- If you reach full retirement age in 2025, the limit is $62,160, but it only counts up to the month before your birthday. In this case, the reduction is $1 for every $3 over the limit.
- Once you reach full retirement age, there are no more limits. You can earn as much as you want without losing a single cent of your benefits.
Not all income counts
Good news: not all income affects your Social Security. SSA only considers the money you earn from working, whether as an employee or self-employed.
- This means the following income doesn't count toward the limit:
- Private or government pensions.
- Rental income from properties.
- Investment dividends.
- Bank interest.
- Military or government retirement plans.
This gives you more flexibility to organize your finances without worrying about losing your benefits.
The special rule for those who retire mid-year
There's a little-known exception that can help you if you decide to retire during the year and you've already earned more than allowed: the special rule.
This rule allows you to receive your full check in any month when your earnings are below the monthly limit, even if you've exceeded the annual limit. It's a way to protect you if you stop working halfway through the year.
Plan before making decisions
Many retirees keep working, whether out of necessity or for enjoyment. What's important is knowing how to do it without losing money. A common mistake is starting to receive benefits too soon, without properly calculating the impact on your income.
Before making decisions, talk to a financial advisor. Evaluate your options, know the limits well, and plan strategically. Social Security isn't a gift: it's a right you've earned, so take good care of it.