The Most Important Rule: Your Age Matters
When it comes to working while receiving Social Security, the single most important factor is your age relative to your “full retirement age.”
What is full retirement age, or FRA? It’s the age at which you are first entitled to receive your full, unreduced retirement benefit. This age isn’t the same for everyone; it depends on the year you were born. For people born between 1943 and 1954, it’s 66. For those born in 1960 or later, it’s 67. For birth years in between, it falls somewhere in the middle.
If you’re not sure of your exact full retirement age, the Social Security Administration has a handy calculator on their website. You can find it by visiting the official Social Security Administration website and searching for “retirement age calculator.” Knowing this date is the foundation for everything else.
Once you know your FRA, the rules about working are broken down into three simple categories.
If You Work While Under Your Full Retirement Age
This is the period where the strictest rules apply. If you decide to claim your Social Security benefits early (you can start as early as age 62) and continue to work, you are subject to an annual earnings limit.
For 2024, that limit is $22,320 per year.
Here’s how it works: For every $2 you earn above that $22,320 limit, the Social Security Administration will temporarily withhold $1 from your benefit payments. It’s important to know this money isn’t gone forever, but it does reduce your monthly income in the short term. We’ll talk more about getting that money back later.
Let’s look at a simple example. Imagine Sarah is 64 years old, and her full retirement age is 67. She takes a part-time job at a local bookstore and earns $26,320 in a year. This is $4,000 over the $22,320 limit. To calculate the withholding, we divide that overage by two ($4,000 / 2 = $2,000). The SSA would withhold $2,000 of her benefits during that year.
This rule applies only to income you earn from a job or from self-employment. It does not apply to other income like pensions, interest, dividends, or withdrawals from your retirement accounts like a 401(k) or IRA.
If You Work During the Year You Reach Full Retirement Age
The rules become more generous in the calendar year you will hit your FRA. In this specific year, a higher earnings limit applies, and the withholding calculation is different.
For 2024, the limit for the year you reach FRA is $59,520 per year.
This higher limit only applies to the earnings you make in the months *before* your birthday month. For every $3 you earn above this limit during that period, the SSA will withhold $1 from your benefits.
For example, let’s say David’s 67th birthday (his FRA) is in September. He has a consulting project from January to August and earns $65,520. That is $6,000 over the $59,520 limit. The SSA would withhold $2,000 of his benefits ($6,000 / 3). But starting in September, the month he reaches FRA, the earnings limit disappears completely.
If You Work After Reaching Full Retirement Age
This is the simplest and best-case scenario. The month you reach your full retirement age, the earnings limit no longer applies to you. You can earn any amount of money from a job—whether it’s $10,000 or $100,000—and your Social Security benefit payment will not be reduced by one penny.
This freedom is a major milestone. It allows you to work as much or as little as you want without worrying about the SSA withholding your benefits. This is why some people choose to wait until their full retirement age to start collecting Social Security, especially if they plan to continue working.
A quick note about getting withheld benefits back: If the SSA did withhold some of your benefits because you earned over the limit before your FRA, that money is not lost. Once you reach your full retirement age, the SSA recalculates your benefit amount to give you credit for the months they withheld payments. Your monthly check will increase slightly to account for this over the long term.
