If you claim Social Security at age 66 and continue working, how much can you earn before your benefits are reduced?
This question is crucial for people thinking of drawing benefits before or right around full retirement age.
What is full retirement age and how does age 66 relate to it?
Your full retirement age (FRA) is the point at which you can receive full Social Security retirement benefits without reduction for working.
For those born between 1955 and 1959, the FRA is between the ages of 66 and 67.
If you are 66 in 2025, you may or may not have reached FRA depending on your birth year.
The key is whether you’ve reached the specific month of your FRA.
Once you hit FRA, there is no earnings limit, and your benefits will not be reduced regardless of how much you make.
What is the earnings limit before full retirement age?
Before you reach full retirement age, the Social Security Administration applies an earnings test.
In 2025, the lower exempt amount (for people who are younger than FRA during the whole year) is $23,400.
If you earn more than that, your benefits will be reduced.
If you will reach FRA in 2025, there is a higher exempt amount of $62,160.
But the earnings test applies only to earnings before the month you reach FRA.
How much are the benefits reduced if you earn over the limit?
When the earnings exceed the exempt amount before full retirement age, reductions work like this:
- For those younger than FRA throughout the year: $1 is deducted from benefits for every $2 earned above $23,400.
- In the year you reach FRA, for earnings before your FRA month: $1 is withheld for every $3 earned above $62,160.
Importantly, the deductions are only on earnings before the month you hit FRA. After that month, you may earn any amount without reduction.
If I’m already at full retirement age at 66, can I earn unlimited money?
Yes. Once you are at full retirement age, the earnings limit no longer applies.
You can earn as much as you like without Social Security withholding your benefits.
If you’re exactly 66 and that aligns with your FRA, your benefit is safe from reductions, no matter your income.
Do withheld benefits reduce your lifetime benefit?
No, the benefits withheld due to excess earnings are not permanently lost.
When you reach full retirement age, the Social Security Administration will recalculate your benefit to account for months when benefits were withheld.
That effectively restores the withheld amount over your remaining lifetime.
Also, SSA annually reviews your earnings record. If your later earnings replace lower-earning years, your benefit may increase.
What types of income count toward earnings limits?
Only wages or net self-employment income are counted toward the earnings limits. Bonuses, commissions, or vacation wages count too.
Income that does not count includes pensions, annuities, investment income, interest, veteran benefits, and many government retirement payments.
Can you work part of the year to avoid reductions?
Yes. There’s a special monthly rule in the year you reach FRA.
If you retire midyear, some months before your FRA may not count toward the earnings test.
That can allow you to avoid reductions depending on when your earnings occur.
