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Working While on Social Security: Earnings Limits, Taxes and Considerations
Balancing work and Social Security benefits is a common concern for many individuals approaching or in retirement. Social Security benefits provide a financial foundation, but continuing to work can be both personally fulfilling and financially beneficial. So how much money can you make while on Social Security?
How Earnings Affect Social Security
Earnings from work can affect your Social Security benefits, particularly if you begin taking benefits before reaching your full retirement age (FRA). The Social Security Administration (SSA) establishes a limit on how much you can earn without seeing a reduction in benefits. If you exceed this limit, a portion of your benefits may be withheld. For those who have reached FRA, there’s generally more flexibility, as your benefits are no longer reduced based on earnings. It’s important to check the specific earnings limits each year, as these numbers are periodically adjusted.
When you exceed the earnings limit before FRA, Social Security will temporarily withhold $1 for every $2 you earn above the threshold.
How Much Money Can You Make While on Social Security?
The amount you can earn while receiving Social Security depends on your age relative to your Full Retirement Age (FRA). For those under FRA, the earnings limit is typically lower, and exceeding it results in withheld benefits. In 2024, the annual earnings limit for individuals under FRA is $22,320. In the year you reach FRA, a higher limit applies; for 2024, this is $59,520. Only earnings before you reach FRA that year are counted toward this limit, and Social Security withholds $1 for every $3 earned above it.
Winding Down Work and Gearing Up for Retirement
For those considering retirement, there’s no single “right” way to transition out of the workforce. You might consider reducing your hours or moving to a part-time role before fully retiring. Phasing into retirement can help ease the financial and emotional transition, allowing you to adjust gradually without a sudden drop in income.
During this phase, it’s wise to monitor your earnings carefully to avoid unexpectedly reducing your Social Security benefits. If you’re under FRA and approaching the annual earnings limit, adjusting your work schedule may help you stay within it.
Contact Benefits Advisors to Learn How Much You Can Make While on Social Security
Navigating Social Security earnings limits and taxes can be complex, especially if you’re balancing work with retirement plans. Benefits claim advisors or financial planners can provide guidance specific to your situation, helping you understand how much you can earn and how to maximize your Social Security benefits. Contact one today to learn more about your benefits.
