Making unlimited income without affecting your Social Security benefits is possible, but depends on your age and the type of benefits you receive. Here is a quick overview of the rules:
At What Age Can You Collect Social Security?
You can start collecting Social Security retirement benefits as early as age 62. However, your benefits will be permanently reduced if you start collecting before your full retirement age (FRA). Your FRA depends on when you were born:
| Year of Birth | Full Retirement Age |
|---|---|
| 1943-1954 | 66 years |
| 1955 | 66 years and 2 months |
| 1956 | 66 years and 4 months |
| 1957 | 66 years and 6 months |
| 1958 | 66 years and 8 months |
| 1959 | 66 years and 10 months |
| 1960 or later | 67 years |
The Earnings Test
If you start collecting Social Security before your FRA, your benefits may be reduced if you earn over certain limits. This is known as the earnings test. Here are the 2023 earnings limits:
- Under FRA: $21,240 per year ($1,770 per month)
- Year you reach FRA: $56,520 per year ($4,710 per month)
If you earn over these limits, $1 in benefits will be deducted for every $2 you earn above the limit. This reduction is temporary – your benefit will be increased after you reach FRA to account for benefits withheld.
Unlimited Earnings After FRA
Once you reach your full retirement age, the earnings test no longer applies. You can earn any amount from work without reducing your Social Security benefits. This allows for unlimited income without affecting benefits.
For example, if your FRA is 67 and you start collecting $2,000 per month in benefits at 62, your benefit may be reduced due to the earnings test. But at 67, you can earn as much as you want from working without your $2,000 benefit being affected.
Other Benefits
The earnings test also applies to disability and survivor benefits if you are below your FRA. But once you reach FRA, these benefits are also not affected by your earnings.
For spousal benefits, the earnings test applies based on the working spouse’s age, not the age of the spouse receiving benefits.
Self-Employment Income
If you have self-employment income, special rules apply. You pay Social Security taxes on up to $160,200 of combined self-employment and wage income as of 2023. So your benefits may be affected if your total income is over the earnings test limits, even if your self-employment income alone is under.
Strategies
With some planning, you may be able to receive Social Security benefits and still earn as much as you want. Some strategies include:
- Waiting to claim benefits until you reach full retirement age
- Only working part-time before your FRA to stay under the earnings limits
- Living off retirement savings before your FRA to avoid earned income
- Working for employers exempted from the earnings test, like some non-profits and government agencies
Consulting with a financial advisor can help you maximize your Social Security benefits while still earning as much as you want.
Conclusion
Once you reach full retirement age for Social Security, currently between 66-67 depending on your year of birth, your benefits will not be affected by your earnings. This allows for unlimited income from working without reducing your Social Security benefits. Understanding the earnings test and planning your benefits and work strategies appropriately allows you to receive the maximum benefits you have earned.