It’s a pitfall you must keep on your radar.
The typical retired worker on Social Security today collects about $23,000 a year. For many people, that’s just not enough income to live comfortably. So you may be thinking of supplementing your monthly Social Security checks with earnings from a part-time job.
Even if you aren’t having a hard time financially, working in retirement has its benefits. For one thing, it’s a reason to get out of the house. Also, many retirees come to miss the social interactions that come with being part of a workplace. Returning to a job in some shape or form could be a boon to your mental health if it gives you access to people to talk to.
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Now you should know that if you’re collecting Social Security, you’re not barred from holding down a paying job. But if you’re not careful, that job could cause you to lose a portion of your Social Security checks.
You need to know the rules
Once you reach full retirement age, you can earn any amount of money from a job without having to worry about the impact on your Social Security benefits. If anything, earnings from a job might boost your monthly benefits if they’re counted toward your 35 highest-paid years of income. But that’s a positive benefit, not a negative one.
However, if you opt to work and collect Social Security before having reached full retirement age, you’ll be subject to an earnings-test limit. And exceeding that limit could cause some of your Social Security benefits to be withheld.
Social Security’s earnings-test limits change every year. But here what you need to know for 2025.
- If you haven’t reached full retirement age and won’t reach it at any point next year, your earnings-test limit is $23,400. Beyond that, you’ll have $1 in Social Security withheld per $2 of income.
- If you haven’t reached full retirement age at the start of 2025 but will reach it at some point next year, your earnings-test limit is $62,160. From there, you’ll have $1 in Social Security withheld per $3 of income.
You should know, however, that withheld benefits aren’t the same as forfeited benefit. Once you reach full retirement age, those withheld benefits are added back into your Social Security checks.
However, if your goal of holding down a job is to improve your financial picture, then you may not get there if your earnings reach the point where your Social Security income is withheld to some degree. So you’ll need to be mindful of the earnings-test limits and adjust your working hours accordingly if need be.
A move worth making
Working as a retiree has lots of benefits, and you shouldn’t necessarily avoid holding down a job due to the aforementioned restrictions. The reality is that you get a fair amount of leeway to earn money from a job in 2025 without risking having some of your Social Security withheld. So there’s no reason not to pursue a job opportunity if you feel that working makes sense for you for one reason or another.