Working and Receiving Social Security (New 2025 Rules)
Thinking about working while collecting Social Security in 2025?
Good.
But before you take that step, you need to understand how the rules work.
If you don’t, you could see your monthly checks reduced and wonder where the money went.
The key is something called the “earnings test.” A lot of people mistake it for a penalty. It’s not. It’s a temporary reduction.
The SSA withholds some of your checks now, but later on they recalculate your benefit and pay it back through higher monthly payments.
The problem is most people don’t know exactly when the test applies, what types of income count, or how it can affect family benefits until it's too late.
This article breaks it all down in plain English, so you can keep working, collect your benefits, and make the most of your Social Security.
2025 Social Security Earnings Limit Rules
Exceptions to the rules:
These rules apply only to Social Security retirement benefits.
They do not affect Supplemental Security Income (SSI) or Disability Insurance (SSDI).They only affect individuals who have not yet reached Full Retirement Age (FRA).
a. If you were born in 1954 or earlier, your FRA is 66.
b. Starting in 1955, the FRA shifts upward by two months per birth year and lands at 67 for those born in 1960 or later.
How the Earnings Limit Works:
1. If you’re under FRA for the entire year:
Annual limit: $23,400
Penalty: SSA withholds $1 for every $2 you earn above that amount.
2. If you reach FRA during 2025:
Annual limit (only counts before FRA month): $62,160.
Penalty: SSA withholds $1 for every $3 over the limit—only for earnings before your FRA month.
Why This Matters
Working while collecting benefits before FRA doesn’t penalize you forever.
It may dent your checks now but SSA recalculates once you hit FRA. That unpaid portion comes back in the form of a higher monthly benefit later.
You don’t lose, you defer.
Frequently Asked Questions
What kind of income counts as “earnings”?
Let’s clear this up because it confuses many.
Income that does NOT count:
Pension payments
Annuity payments
IRA or other retirement account withdrawals
Dividends
Interest
Capital gains
Veterans benefits
Government or military retirement benefits.
Income that DOES count:
Gross wages from a job
Net earnings from self-employment (that means after business expenses)
Does the SSA look at single or joint income?
SSA looks only at your own earnings, not your spouse’s. Your spouse’s pay doesn’t reduce your benefits from your work record.
If your spouse or child collects benefits based on your work record, then your excess earnings will affect their benefits. So, your work income can ripple through to their checks.
One last point: an ex-spouse’s earnings won't affect your benefits. That’s off limits.
What happens to benefits withheld due to the earnings limit?
The good news is that you don’t lose that money forever.
When you hit Full Retirement Age, the SSA runs an Adjustment to the Reduction Factor (ARF). It’s a fancy term for recalculating your benefits to give you credit for the months benefits were withheld.
What does that mean for you? Your monthly checks go up after FRA to make up for what you missed before.
How is the earnings limit actually applied?
SSA doesn’t take bits and pieces. It withholds full months of benefits to cover your excess earnings.
For example: If you earned $10,000 over the limit, SSA withholds $5,000 in benefits.
If your monthly benefit is $2,000, they’d withhold your checks for January, February, and March (because 3 months × $2,000 = $6,000, slightly more than $5,000).
That’s how they balance the books.
Should you tell the SSA if you will be over the limit?
Absolutely. You must inform SSA as soon as you know.
Filing a work report with your estimated earnings helps prevent surprise overpayments. Overpayments are a headache because they can cause you to owe backpay or delay future benefits.
Be proactive and keep communication open.
When does the limit switch from an annual to a monthly limit?
This is the tricky part called the “Grace Year” rule, and it only applies during your first year of receiving benefits.
If you have any “non-service months,” where your earnings fall below the monthly limit, then SSA applies the test month-by-month for that calendar year, rather than just looking at the total annual earnings.
To find the monthly limit, SSA just divides the annual limit by 12.
Will the earnings limit affect spousal or children's benefits?
Yes and no.
Yes, if your benefits are stopped because of excess earnings, any benefits paid to others (spouse, children) from your work record also stop during that period.
No, this rule does not apply to benefits paid to an ex-spouse.
So your earnings can ripple through your family’s benefits, but not your ex’s.
What to do next
You now know more about the Social Security earnings test than 90% of Americans (and probably more than the folks answering the phones at SSA).
Yet, most people will keep bumbling along, lose checks they didn’t have to lose, and complain about how the system is unfair.
Not you. You’ve got the inside track. You understand the rules, you know how to work them, and you’ve got the power to decide how to play it.
So here’s the challenge:
Are you going to just nod, click away, and forget this?
Or are you going to take five minutes, run your numbers, and make a plan so every dollar works in your favor?
Because if you don’t, the government will happily scoop those dollars up and thank you for your generosity.
Your choice.