We spend decades working while looking forward to retirement and more time to ourselves. But for some of us, the lack of routine, the loss of income, or even the absence of social connections makes retirement less than what we hoped for.
Even if you retire, you don’t have to stop working entirely. You may be able to continue to earn an income and still collect retirement benefits, but there are a few important rules to keep in mind in 2025.
How Much You Can Earn While Collecting Social Security Depends on Your Age
The Social Security Administration (SSA) may set annual income limits based on your current age and Full Retirement Age (FRA). The FRA for most people born after 1943 is between 66 and 67.
If You’re Collecting Social Security Before Full Retirement Age
Here’s where it gets a little tricky. If you’re still working a good amount and not quite at your FRA yet, your retirement benefit check could take a hit.
In 2025, the annual earnings limit is $23,400. If you go over that, $1 will be withheld from your benefits for every $2 you earn above the limit.
The Year You Reach Full Retirement Age
The rules loosen up the year you hit your FRA. In 2025, you can earn up to $62,160 before any benefits are withheld. And only $1 is held back for every $3 earned if you go over. But the SSA only counts your income up to the month before you reach your FRA.
So, if you’ve got one more good year in you before ‘official’ retirement, you’ve got some breathing room to finish strong.
After Full Retirement Age? Work All You Want.
Once you reach your FRA, there’s no income cap at all. You can earn as much as you’d like without impacting your Social Security benefit. No reductions, no limits, and no strings attached.
Whether you’re consulting part-time, running a small business, or just enjoying a side hustle, your full retirement benefit payment is yours to keep.
What’s the Special Earnings Limit Rule?
If you claim Social Security partway through the year and you’ve already earned more than the annual limit, there’s a helpful exception you should know about. It’s basically a safety net for your first year of retirement.
Here’s how it works:
· If you’re younger than your full retirement age for the entire year (2025) and your monthly earnings are $1,950 or less, those months count as “retired.” SSA will still pay you full benefits, regardless of what your yearly earnings total.
· If you reach your full retirement age during the year, the monthly threshold increases to $5,180. Again, as long as your earnings stay under that amount (and you’re not doing substantial work in self-employment), SSA considers you retired for those months and pays benefits in full.
This special rule can only be used once, typically in your first year of collecting benefits.
What Counts as Work, and What Counts as Income?
When it comes to working during retirement, not all income is treated the same. If you’re trying to figure out whether your earnings will affect your Social Security benefits or trigger tax implications, here’s what actually counts as “earned income” and what doesn’t.
Counted as Work Income
These types of earnings will usually impact your Social Security benefits if you’re younger than full retirement age:
· Wages from a job (even part-time or seasonal work)
· Self-employment income (after expenses)
· Bonuses, commissions, and vacation pay
· Sick pay (if received within six months after you last worked)
If you’re actively working and earning a paycheck (whether for an employer or yourself), it counts.
Not Counted as Work Income
These don’t count against your Social Security earnings limits, and won’t reduce your monthly benefit:
· Pensions or annuities
· IRA or 401(k) withdrawals
· Dividends and interest from investments
· Rental income (unless it’s your primary job)
· Veterans benefits
· Unemployment or workers’ comp
· Capital gains from selling property or stocks
Passive income and retirement withdrawals are fine. What matters is how much you’re actively earning from work.
Don’t Forget Taxes
No one likes surprises from the IRS, especially not in retirement. Social Security rarely advertises that your benefits can be taxed if your income crosses a certain threshold.
In 2025, you may owe taxes on up to 85% of your benefits if your income exceeds:
· $25,000 (single)
· $32,000 (married filing jointly)
You can request to have taxes withheld from your Social Security benefits so you don’t have to deal with a big bill come tax time.
Should I Pause My Benefits While Working?
If you’re younger than the FRA and working enough to go over the annual earnings limit, the SSA may withhold part or all of your benefits. In that case, you might consider pausing your benefits voluntarily, especially if your job is picking up steam, long-term, or you just don’t need the monthly check right now.
· You avoid benefit reductions caused by earning too much before full retirement age
· Your future benefits may increase because when you pause, SSA recalculates your monthly check later on, factoring in those missed months
· It gives you flexibility if your work situation is temporary or seasonal
Think of it like putting your benefits on the back burner while you focus on growing your income or reaching full retirement age.
Is Working While Retired Right for You?
There’s no one-size-fits-all answer. For some, a few hours a week brings structure and social time. For others, it’s about keeping the lights on and covering rising costs.
Here’s what working in retirement can offer:
· Extra income without tapping into savings
· A chance to stay active and mentally sharp
· Opportunities to try something new on your terms
Retirement doesn’t have to mean rocking chairs and golf carts (unless you want it to). You get to redefine what this next chapter looks like.
And if you’re not sure what the right move is? That’s okay. Talk to a financial advisor or Social Security rep before making any big changes. You’ve worked too hard to leave money on the table.
By Admin –