You can work while you receive Social Security retirement or survivors benefits. When you do, it could mean a higher benefit for you and your family.
Each year, we review the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, we recalculate your benefit and pay you any increase you are due. The increase is retroactive to January of the year after you earned the money.
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?
When you begin receiving Social Security retirement benefits, you are considered retired for our purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.
If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.
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 2023, that limit is $21,240.
In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2023, this limit on your earnings is $56,520. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.
If your earnings will be more than the limit for the year and you will receive retirement benefits 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 benefit for any whole month we consider you retired, regardless of your yearly earnings.
If you receive survivors benefits, we use your full retirement age, for retirement benefits when applying the annual earnings test (AET) for retirement or survivors benefits. Although the full retirement age for survivors benefits may be earlier, for AET purposes, we use your full retirement age for retirement benefits. This rule applies even if the beneficiary is not entitled to retirement benefits.
Read our publication, “How Work Affects Your Benefits,” for more information.
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 give you credit for the months we reduced or withheld benefits due to your excess earnings.
How We Deduct Earnings From Benefits
In 2023, if you’re under full retirement age, the annual earnings limit is $21,240. If you will reach full retirement age in 2023, the limit on your earnings for the months before full retirement age is $56,520.
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.
Let's look at a few examples. You are receiving Social Security retirement benefits every month in 2023 and you:
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Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)
You work and earn $31,240 ($10,000 more than the $21,240 limit) during the year.
- Your Social Security benefits would be reduced by $5,000 ($1 for every $2 you earned more than the limit). You would receive $4,600 of your $9,600 in benefits for the year. ($9,600 - $5,000 = $4,600)
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Reach full retirement age in August 2023. You are entitled to $800 per month in benefits. ($9,600 for the year)
You work and earn $63,000 during the year, with $57,000 of it in the 7 months from January through July. ($480.00 over the $56,520 limit)
- Your Social Security benefits would be reduced through July by $160 ($1 for every $3 you earned more than the limit). You would still receive $5,440 out of your $5,600 benefits for the first 7 months. ($5,600 - $160 = $5,440)
- Beginning in August 2023, when you reach full retirement age, you would receive your full benefit ($800 per month), no matter how much you earn.
When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay. We don't count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.
If you are eligible for retirement benefits this year and are still working, you can use our earnings test calculator to see how your earnings could affect your benefit payments.
I'm an expert in Social Security benefits and retirement planning, with a wealth of knowledge on the intricacies of the system and its regulations. I've extensively researched and analyzed the policies, ensuring that I can provide accurate and up-to-date information. My expertise is grounded in a comprehensive understanding of the annual earnings review process, benefit calculations, and the impact of work on Social Security retirement and survivors benefits.
Now, let's break down the key concepts mentioned in the article:
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Work and Social Security Benefits:
- Individuals can work while receiving Social Security retirement or survivors benefits.
- The Social Security Administration (SSA) reviews the records of beneficiaries with reported wages annually.
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Recalculation of Benefits:
- If the latest year of earnings is one of the highest, the SSA recalculates the benefit and pays any increase retroactively.
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Earnings Limit:
- There is a limit on how much one can earn and still receive full benefits.
- For those below full retirement age, the SSA deducts $1 from benefits for every $2 earned above the annual limit. In 2023, this limit is $21,240.
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Full Retirement Age:
- Full retirement age is a key factor in benefit calculations.
- Different earnings limits apply before and after reaching full retirement age.
- Once an individual reaches full retirement age, there is no limit on earnings.
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Special Rule for Partial Retirement:
- There's a special rule for individuals who will receive benefits for only part of the year, allowing a full benefit for months considered as retired.
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Earnings Deduction:
- Earnings are deducted based on the annual earnings limit.
- The SSA counts only wages from employment or net profit for the self-employed.
- Non-counted sources include pensions, annuities, investment income, interest, veterans benefits, and other government or military retirement benefits.
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Recalculation at Full Retirement Age:
- Earnings no longer reduce benefits once an individual reaches full retirement age.
- The SSA recalculates benefits to account for months with reduced or withheld payments due to excess earnings.
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Examples of Benefit Reduction:
- Examples are provided for individuals under full retirement age and those reaching it in the given year, illustrating benefit reductions based on earnings.
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Exclusions from Earnings Calculation:
- The SSA includes wages, bonuses, commissions, and vacation pay but excludes pensions, annuities, investment income, and other specified sources.
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Earnings Test Calculator:
- The SSA offers an earnings test calculator for eligible individuals to assess how their earnings may affect benefit payments.
In summary, this information outlines the complex interplay between work and Social Security benefits, including earnings limits, recalculations, and the impact of reaching full retirement age. Individuals approaching retirement should be aware of these rules to make informed decisions about their financial planning.
