Social Security Income Limits: What You Need to Know

Q: How does the Retirement Earnings Test work before FRA?

If you are under FRA for the entire year, Social Security withholds $1 in benefits for every $2 you earn above the annual earnings limit. In the year you reach FRA, they withhold $1 for every $3 above a higher, separate limit, and only count earnings before the month you hit FRA.

Q: Do income limits apply after I reach Full Retirement Age?

No. Once you reach FRA, the earnings test ends—there is no cap on what you can earn from work without reducing your Social Security retirement benefit.

Q: What counts as “earnings” toward the limit?

Wages from a job and net earnings from self-employment. Investment income, pensions, annuities, 401(k)/IRA withdrawals, and rental income (unless it’s self-employment) generally do not count toward the retirement earnings test.

Q: If benefits are withheld, do I lose them forever?

No. When you reach FRA, Social Security recalculates your benefit and permanently increases it to credit the months that were fully withheld, helping you recover value over time.

Q: How do income limits differ for SSDI and SSI?

SSDI uses the SGA standard: earning above SGA may end disability entitlement after work incentives (trial work period, extended period of eligibility). SSI is need-based; countable income reduces the monthly payment using SSI’s income-counting rules and exclusions.

Q: Do bonuses, vacation pay, or severance count?

Generally, earnings are counted when paid (for employees). Some payments for work done in an earlier period may still count. If you’re retiring mid-year, ask SSA how specific payments will be treated.

Q: Will my spouse’s or investment income affect my retirement benefit?

Not for the earnings test. Spousal income and non-wage income don’t reduce retirement benefits. However, your combined income can affect whether your benefits are taxable for federal income tax purposes.

Social Security Income Limits

Understanding Social Security income limits is essential for anyone who is currently receiving benefits or planning to apply soon. At Diversified Insurance Brokers, we help clients navigate these rules so they can maximize their Social Security payments without accidentally triggering reductions. With access to 100+ top-rated carriers and decades of experience in retirement planning, our team is here to guide you every step of the way.

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Why Social Security Income Limits Matter

Social Security income limits determine how much you can earn from working before your benefits are reduced. These limits vary depending on your age, whether you’ve reached full retirement age (FRA), and the year in which you reach FRA. If you’re under full retirement age for the entire year, earning above the annual limit could result in a temporary withholding of benefits. Once you reach FRA, you can earn any amount without affecting your Social Security payments.

How Income Limits Work

Before Full Retirement Age: The Social Security Administration (SSA) will deduct $1 in benefits for every $2 you earn above the annual limit.
The Year You Reach FRA: The SSA will deduct $1 for every $3 you earn above a higher annual limit, but only for earnings before your birthday month.
After Full Retirement Age: There are no earnings limits—your benefits are not reduced regardless of income.

Example: In 2025, if you are under FRA and earn $5,000 over the annual limit, $2,500 would be withheld from your benefits for that year. However, these withheld amounts are not lost—they’re factored into a higher monthly benefit once you reach FRA.

Who Should Pay Special Attention to Income Limits?

Individuals planning to start benefits before FRA while continuing to work
Self-employed individuals whose earnings can vary from year to year
Retirees considering part-time or seasonal work
People who want to maximize total lifetime benefits by timing Social Security strategically

Our advisors at Diversified Insurance Brokers help you evaluate your work plans, income streams, and benefit timing so you can keep more of what you’ve earned. With a clear strategy, you can avoid surprises and make the most of your Social Security income.

Social Security Income Limits — FAQs

What are Social Security “income limits”?

They are rules that reduce or affect benefits if you earn above certain thresholds. For retirement benefits, this is the Retirement Earnings Test before Full Retirement Age (FRA). For disability, limits relate to Substantial Gainful Activity (SGA)

How does the Retirement Earnings Test work before FRA?

If you are under FRA for the entire year, Social Security withholds $1 in benefits for every $2 you earn above the annual earnings limit. In the year you reach FRA, they withhold $1 for every $3 above a higher, separate limit, and only count earnings before the month you hit FRA.

Do income limits apply after I reach Full Retirement Age?

No. Once you reach FRA, the earnings test ends—there is no cap on what you can earn from work without reducing your Social Security retirement benefit.

What counts as “earnings” toward the limit?

Wages from a job and net earnings from self-employment. Investment income, pensions, annuities, 401(k)/IRA withdrawals, and rental income (unless it’s self-employment) generally do not count toward the retirement earnings test.

If benefits are withheld, do I lose them forever?

No. When you reach FRA, Social Security recalculates your benefit and permanently increases it to credit the months that were fully withheld, helping you recover value over time.

What is the “grace year” and monthly earnings test?

In the first year you claim benefits while working, you may qualify for a monthly test. You can receive any month’s benefit you’re “retired” under SSA’s monthly earnings limit, even if your annual earnings will exceed the yearly threshold.

How do income limits differ for SSDI and SSI?

SSDI uses the SGA standard: earning above SGA may end disability entitlement after work incentives (trial work period, extended period of eligibility). SSI is need-based; countable income reduces the monthly payment using SSI’s income-counting rules and exclusions.

Do bonuses, vacation pay, or severance count?

Generally, earnings are counted when paid (for employees). Some payments for work done in an earlier period may still count. If you’re retiring mid-year, ask SSA how specific payments will be treated.

Will my spouse’s or investment income affect my retirement benefit?

Not for the earnings test. Spousal income and non-wage income don’t reduce retirement benefits. However, your combined income can affect whether your benefits are taxable for federal income tax purposes.

Can working increase my Social Security benefit?

Yes. SSA recalculates your benefit if new earnings replace lower years in your 35-year earnings record. Continuing to work—especially at higher wages—can raise your monthly benefit.

How can I manage income around the limits?

Consider timing when you claim benefits, using the monthly test in your first year, coordinating part-time work before FRA, and understanding which income sources count (wages/self-employment) versus those that don’t (investments/pensions).

Do the earnings limits change?

Yes. Annual limits are typically adjusted each year. Check the current-year thresholds before deciding when to claim or how much to work.

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About the Author:

Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.

His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.

Social Security Income Limits

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Social Security Income Limits — FAQs

Contact Us Today:📞 Call us at 800-533-5969Or visit our Contact Page

Contact Us Today:
📞 Call us at 800-533-5969
Or visit our Contact Page